Statistical Analysis



Statistical Analysis

Introduction

The study is related to the use of standard deviation as a risk indicator for investment purposes. In the financial market, it is important for the inventors to be aware of the product risk that can affect the investment decision made by the investor. To minimize or to cut down the risk for investment purpose, it is important and essential that investors should know about the standard deviation of the product as will provide knowledge about the product which will be useful for making the decision to invest in the product or the stock.

In economics, a financial market is a mechanism that allows agents to exchange financial assets. In general, any product market could be considered as a financial market if the buyer is not the purpose of immediate consumption of the product, but the delay in time consumption. However, the investment in the products involves the product risk that should be minimized.

Calculation of Google

We figure the standard deviation for a populace, which expects that the periods included speak to the entire information set, not an example from a greater information set. The computation steps are as takes after:

1.calculation of the mean (normal) cost of wanted perception and period.

2.determine every period's deviation (close less normal cost).

3.square every period's deviation.

4.sum the squared deviations.

5.divide this whole by the amount of perceptions.

6.the standard deviation is then equivalent to the square base of that number.

 

10-period Standard Deviation of Population

 

 

 

 

Date

QQQQ Price

10-period Average (mean)

Deviation

Deviation Squared

10-period Average of Deviation Squared

Standard Deviation

 

 

 

 

 

 

 

 

1

21-Feb-13

53.73

54.09

-0.36

0.13

 

 

2

22-Feb-13

53.87

54.09

-0.22

0.05

 

 

3

23-Feb-13

53.85

54.09

-0.24

0.06

 

 

4

24-Feb-13

53.88

54.09

-0.21

0.04

 

 

5

25-Feb-13

54.08

54.09

-0.01

0.00

 

 

6

26-Feb-13

54.14

54.09

0.05

0.00

 

 

7

27-Feb-13

54.50

54.09

0.41

0.16

 

 

8

28-Feb-13

54.30

54.09

0.21

0.04

 

 

9

1-Mar-13

54.40

54.09

0.31

0.09

 

 

10

2-Mar-13

54.16

54.09

0.07

0.01

0.06

0.24

The spreadsheet above shows a case for a 10-period standard deviation utilizing QQQQ information. Notice that the 10-period normal is figured after the tenth period and this normal is connected to every one of the 10 periods. Building a running standard deviation with this equation might be truly escalated. Outperform has a less demanding path with the STDEVP equation. The table underneath shows the 10-period standard deviation utilizing this equation.

10-period Standard Deviation of

Population using STDEVP in Excel

 

 

 

1-Feb-13

52.22

 

2-Feb-13

52.78

 

3-Feb-13

53.02

 

4-Feb-13

53.67

 

5-Feb-13

53.67

 

6-Feb-13

53.74

 

7-Feb-13

53.45

 

8-Feb-13

53.72

 

9-Feb-13

53.39

 

10-Feb-13

52.51

(STDEVP)

11-Feb-13

52.32

0.51

12-Feb-13

51.45

0.73

13-Feb-13

51.60

0.86

14-Feb-13

52.43

0.83

15-Feb-13

52.47

0.79

16-Feb-13

52.91

0.72

17-Feb-13

52.07

0.68

18-Feb-13

53.12

0.58

19-Feb-13

52.77

0.51

20-Feb-13

52.73

0.52

21-Feb-13

52.09

0.53

22-Feb-13

53.19

0.48

23-Feb-13

53.73

0.49

24-Feb-13

53.87

0.58

25-Feb-13

53.85

0.62

26-Feb-13

53.88

0.67

27-Feb-13

54.08

0.62

28-Feb-13

54.14

0.66

1-Mar-13

54.50

0.69

2-Mar-13

54.30

0.65

3-Mar-13

54.40

0.36

4-Mar-13

54.16

0.24

Calculation of Apple Inc.

Execute:

a.

b.

c.

Analysis

For venture reason, standard deviation is a representation of the danger subsidiary with a conceded security (stocks, bonds, house, and so forth.), or the danger of a portfolio of securities (earnestly composed common capital, index shared capital, or Etfs). For exhibit, assume a shareholder needed to select from the two stocks that are Apple and Google. Stock Apple in the course of the most recent 20 years had a mean returned of 10 percent with a standard deviation of 20 rate focuses (pp). Stock Google, over the indistinguishable time compass, had mean returns of 12 percent, however a higher standard deviation of 30 pp. On the foundation of danger and return, a shareholder may presume that Stock Apple is the more secure elective, in light of the fact that Stock Google included 2 percent purposes of returned is not worth the included 10 pp standard deviation (more amazing hazard or question of the expected return). Stock Google is in the cards to drop short of the introductory becoming tied up ...