Market Models for Stock Analysis

The return on a security is dependent on the return of Market Portfolio and it depends on the unique conditions of a particular firm. The extent of responsiveness of security is measured by Beta and a graph line is plotted using asset returns against market portfolio returns. This describe the relationship between both of them and this can be termed as Single- Index Mod.

Analysis of Stock Returns

There are two popular methods for analyzing stock. One, technical analysis and two fundamental analysis. Fundamental analysis is done on the historical data to evaluate the decision of the management of the company and calculate credit risk. Technical analysis is a  financial market technique that claims the ability to forecast the future directions of security prices through the study of past market data, primary price and volume.