Group Assignment

Course Code: BFI301/AS311

Course Name: Portfolio Management / Investment Portfolio Management

Department: Faculty of Business Management

Instructor Name: Asst Prof Dr. Liew Chee Yoong

Word Count: 1913 words (excluding cover page, questions, references)

No Student Name Student ID

1 Barney Stephen Adrianus Kwik 1001954634
2 Cindy 1001953944
3 Divyadarshini 1001850695
4 Elyssia Yuwono 1001953942
5 Li Shiyi 1001851296
6 Sellyn Felicya Astomo 1001953773
7 Soh Chow You 1001850512
8 Steffanie Gabrielle Tjahjono 1001955040
9 Tan Wai Yin 1001955522
10 Viony Catelina 1001953775
1. Get the historical exchange rate data from 2004-2007 on the Malaysian Ringgit against
any two currencies in the world by visiting http://www.oanda.com/convert/fxhistory or
some other website. Calculate the correlation between these 2 exchange rates over this
period. (10 marks)
The exchange rate chosen:
1. Malaysian Ringgit and GBP (MYR/GBP), assumed as X
2. Malaysian Ringgit and EUR (MYR/EUR), assumed as Y
Using daily data from 2004 to 2007 comprising of 986 data (excluding weekend);

Date MYR/ MYR/ 2/12/04 7.1891 4.8709 3/23/04 7.0274 4.6992 4/28/04 6.7981 4.5228
GBP EUR
1/2/04 6.7843 4.7778 2/13/04 7.1942 4.8662 3/24/04 7.0225 4.6751 4/29/04 6.7204 4.4924

1/5/04 6.8353 4.8216 2/17/04 7.1994 4.8733 3/25/04 6.9061 4.6041 4/30/04 6.7159 4.5351

1/6/04 6.8871 4.8286 2/18/04 7.2622 4.8972 3/26/04 6.8446 4.5998 5/5/04 6.8213 4.6062

1/7/04 6.9204 4.8286 2/19/04 7.1788 4.8286 3/29/04 6.8729 4.5935 5/6/04 6.7981 4.6147

1/8/04 6.9013 4.787 2/20/04 7.1633 4.8031 3/30/04 6.9252 4.6361 5/7/04 6.7935 4.5767

1/9/04 6.9541 4.8356 2/24/04 7.0922 4.771 3/31/04 6.9735 4.6512 5/10/04 6.7522 4.5004

1/12/04 7.0373 4.8876 2/25/04 7.1942 4.8239 4/1/04 7.0028 4.6642 5/11/04 6.7431 4.5147

1/13/04 7.0126 4.8426 2/26/04 7.1174 4.7483 4/2/04 7.0323 4.6838 5/12/04 6.7024 4.5106

1/14/04 7.0028 4.8333 2/27/04 7.0771 4.7326 4/5/04 6.9493 4.6041 5/13/04 6.7114 4.5065

1/15/04 6.9493 4.81 3/1/04 7.1225 4.7619 4/6/04 6.9396 4.5767 5/14/04 6.6711 4.4843

1/16/04 6.9108 4.7664 3/2/04 7.0872 4.7125 4/7/04 6.993 4.5935 5/17/04 6.734 4.5809

1/19/04 6.8353 4.7103 3/3/04 6.9686 4.6339 4/8/04 6.9881 4.6253 5/18/04 6.7069 4.5641

1/20/04 6.812 4.7326 3/4/04 6.9589 4.6339 4/9/04 6.9686 4.5998 5/19/04 6.7522 4.5662

1/21/04 6.9348 4.7939 3/5/04 6.9108 4.6318 4/12/04 6.9686 4.5893 5/20/04 6.7114 4.5331

1/26/04 6.9108 4.7619 3/8/04 7.0175 4.6948 4/13/04 6.9348 4.5558 5/21/04 6.7843 4.5641

1/27/04 6.8776 4.7371 3/9/04 7.0472 4.7237 4/14/04 6.8729 4.5372 5/24/04 6.7843 4.5434

1/28/04 6.9589 4.8031 3/10/04 6.9156 4.6642 4/15/04 6.8259 4.5517 5/25/04 6.8353 4.5746

1/29/04 6.9204 4.7551 3/11/04 6.8213 4.6382 4/16/04 6.812 4.5558 5/27/04 6.9252 4.6147

1/30/04 6.8918 4.7081 3/12/04 6.8353 4.6664 4/19/04 6.8681 4.5809 5/28/04 6.993 4.6685

2/4/04 6.9784 4.7642 3/15/04 6.8681 4.6598 4/20/04 6.8306 4.5372 5/31/04 6.9686 4.6447

2/5/04 6.9589 4.7642 3/16/04 6.8729 4.6838 4/21/04 6.7568 4.4984 6/1/04 6.9784 4.6468

2/6/04 6.9735 4.771 3/17/04 6.8823 4.6555 4/22/04 6.7069 4.4924 6/2/04 7.0225 4.6642

2/9/04 7.0621 4.8426 3/18/04 6.9396 4.6664 4/23/04 6.7295 4.5188 6/3/04 6.9589 4.6339

2/10/04 7.0922 4.852 3/19/04 6.9589 4.7037 4/26/04 6.7522 4.4883 6/4/04 6.9784 4.6339

2/11/04 7.1023 4.817 3/22/04 6.9686 4.662 4/27/04 6.8074 4.5208 6/7/04 7.0028 4.6816
 6/8/04 7.0077 4.6882 7/29/04 6.9348 4.5851 9/20/04 6.7981 4.6211 11/9/04 7.0472 4.9116

6/9/04 6.9784 4.6468 7/30/04 6.8918 4.5788 9/21/04 6.7843 4.6339 11/10/04 7.0472 4.8948

6/10/04 6.9541 4.5809 8/2/04 6.9444 4.5872 9/22/04 6.8306 4.6729 11/12/04 7.0225 4.914

6/11/04 6.93 4.5537 8/3/04 6.9156 4.5683 9/23/04 6.8306 4.6685 11/17/04 7.0522 4.9334

6/14/04 6.8681 4.5496 8/4/04 6.9252 4.5683 9/24/04 6.8306 4.6642 11/18/04 7.0721 4.9628

6/15/04 6.8918 4.5788 8/5/04 6.9396 4.5809 9/27/04 6.8587 4.6577 11/19/04 7.0274 4.9237

6/16/04 6.9589 4.6125 8/6/04 6.9348 4.583 9/28/04 6.8823 4.6751 11/22/04 7.0572 4.9554

6/17/04 6.9638 4.5809 8/9/04 6.9979 4.6598 9/29/04 6.8776 4.6795 11/23/04 7.0472 4.9383

6/18/04 6.9444 4.5558 8/10/04 6.9881 4.6642 9/30/04 6.8259 4.6816 11/24/04 7.1073 4.9801

6/21/04 6.9686 4.5977 8/11/04 6.9493 4.649 10/1/04 6.8729 4.7148 11/25/04 7.1582 5.01

6/22/04 6.9348 4.5935 8/12/04 6.9589 4.6555 10/4/04 6.8213 4.7015 11/26/04 7.2098 5.0505

6/23/04 6.9204 4.6211 8/13/04 6.8918 4.6296 10/5/04 6.7889 4.6642 11/29/04 7.1839 5.0327

6/24/04 6.9061 4.5998 8/16/04 6.993 4.6926 10/6/04 6.7797 4.6664 11/30/04 7.1788 5.0327

6/25/04 6.9108 4.6062 8/17/04 6.9832 4.6948 10/7/04 6.7659 4.6707 12/1/04 7.2833 5.0633

6/28/04 6.9444 4.6253 8/18/04 6.9444 4.6838 10/8/04 6.7889 4.6882 12/2/04 7.3801 5.0813

6/29/04 6.9204 4.6147 8/19/04 6.9252 4.6948 10/11/04 6.8213 4.7148 12/3/04 7.2993 5.0403

6/30/04 6.8587 4.5998 8/20/04 6.9589 4.7015 10/12/04 6.7981 4.6838 12/6/04 7.3801 5.102

7/1/04 6.8966 4.6189 8/23/04 6.9061 4.6707 10/13/04 6.812 4.6882 12/7/04 7.3964 5.1046

7/5/04 6.9638 4.6773 8/24/04 6.8634 4.6147 10/14/04 6.8399 4.6948 12/8/04 7.3529 5.0684

7/6/04 6.9638 4.6773 8/25/04 6.8353 4.5956 10/15/04 6.8306 4.7081 12/9/04 7.3206 5.0659

7/7/04 7.0126 4.6926 8/26/04 6.8259 4.5893 10/18/04 6.854 4.7393 12/10/04 7.2833 5.0352

7/8/04 7.0373 4.6992 8/27/04 6.8399 4.5998 10/19/04 6.812 4.7371 12/13/04 7.2939 5.0454

7/9/04 7.0423 4.7059 8/30/04 6.8027 4.5704 10/20/04 6.8681 4.7733 12/14/04 7.3099 5.0582

7/12/04 7.0721 4.7192 9/1/04 6.8213 4.6211 10/21/04 6.9252 4.7962 12/15/04 7.326 5.0607

7/13/04 7.0572 4.6992 9/2/04 6.8213 4.6339 10/22/04 6.9541 4.7985 12/16/04 7.3855 5.0994

7/14/04 7.0621 4.6992 9/3/04 6.7935 4.6253 10/25/04 6.993 4.8591 12/17/04 7.3421 5.0403

7/15/04 7.0274 4.686 9/6/04 6.7522 4.583 10/26/04 6.993 4.8638 12/20/04 7.3855 5.0684

7/16/04 7.0373 4.7015 9/7/04 6.7751 4.5914 10/27/04 6.9832 4.8497 12/21/04 7.3801 5.0839

7/19/04 7.1124 4.7281 9/8/04 6.7476 4.5914 10/28/04 6.9589 4.8309 12/22/04 7.326 5.0813

7/20/04 7.0822 4.7304 9/9/04 6.7889 4.6318 10/29/04 6.9638 4.8497 12/23/04 7.2993 5.1099

7/21/04 7.0472 4.6904 9/10/04 6.7981 4.6468 11/1/04 6.9735 4.8544 12/24/04 7.3046 5.1335

7/22/04 6.9832 4.6598 9/13/04 6.8213 4.6577 11/2/04 6.9589 4.8263 12/27/04 7.3099 5.144

7/23/04 6.9881 4.6447 9/14/04 6.8399 4.6664 11/3/04 6.9832 4.8286 12/28/04 7.3584 5.176

7/26/04 6.9881 4.6232 9/15/04 6.812 4.6512 11/4/04 7.0175 4.8733 12/29/04 7.3421 5.1813

7/27/04 7.0028 4.6168 9/16/04 6.7613 4.6211 11/5/04 6.993 4.8876 12/30/04 7.2939 5.176

7/28/04 6.9252 4.5893 9/17/04 6.8213 4.6382 11/8/04 7.0522 4.9261 12/31/04 7.3153 5.1787
 1/3/05 7.2622 5.1414 3/1/05 7.2939 5.0125 4/20/05 7.2833 4.9554 6/14/05 6.8681 4.6083

1/4/05 7.2359 5.1177 3/2/05 7.2886 5.0025 4/22/05 7.2674 4.9628 6/15/05 6.8776 4.5851

1/5/05 7.1429 5.0378 3/3/05 7.2569 4.9875 4/25/05 7.278 4.9505 6/16/05 6.9108 4.5893

1/6/05 7.1429 5.0226 3/4/05 7.2464 4.9826 4/26/05 7.2411 4.9334 6/17/05 6.93 4.6125

1/7/05 7.1429 5.0176 3/7/05 7.2993 5.0277 4/27/05 7.2254 4.9116 6/20/05 6.9396 4.6512

1/10/05 7.1225 4.9677 3/8/05 7.2833 5.0302 4/28/05 7.2307 4.914 6/21/05 6.9108 4.5998

1/11/05 7.1378 4.99 3/9/05 7.3314 5.0736 4/29/05 7.2727 4.9261 6/22/05 6.9589 4.6318

1/12/05 7.1327 4.985 3/10/05 7.326 5.1073 5/3/05 7.1994 4.8852 6/23/05 6.9156 4.5914

1/13/05 7.1839 5.0378 3/11/05 7.3046 5.102 5/4/05 7.215 4.914 6/24/05 6.9108 4.5809

1/14/05 7.1174 4.9875 3/14/05 7.2993 5.0994 5/5/05 7.2411 4.931 6/27/05 6.9493 4.6253

1/17/05 7.1124 4.985 3/15/05 7.2674 5.071 5/6/05 7.2046 4.9213 6/28/05 6.9204 4.6041

1/18/05 7.0522 4.9456 3/16/05 7.2993 5.0736 5/9/05 7.1633 4.8685 6/29/05 6.8918 4.5704

1/19/05 7.1073 4.9579 3/17/05 7.3099 5.0916 5/10/05 7.1378 4.8733 6/30/05 6.854 4.5872

1/20/05 7.1023 4.9383 3/18/05 7.2939 5.0736 5/11/05 7.1685 4.8996 7/1/05 6.7431 4.5767

1/24/05 7.148 4.9677 3/21/05 7.2569 5.0226 5/12/05 7.0872 4.8497 7/4/05 6.7069 4.5351

1/25/05 7.1378 4.9579 3/22/05 7.2098 5.005 5/13/05 7.0721 4.8146 7/5/05 6.6667 4.5167

1/26/05 7.0972 4.931 3/23/05 7.1685 4.9702 5/16/05 6.993 4.7847 7/6/05 6.6845 4.5372

1/27/05 7.1685 4.985 3/24/05 7.1124 4.9432 5/17/05 6.9832 4.7962 7/7/05 6.6578 4.5372

1/28/05 7.1736 4.9529 3/25/05 7.1073 4.9237 5/18/05 6.9541 4.7893 7/8/05 6.605 4.529

1/31/05 7.1633 4.9456 3/28/05 7.0771 4.9044 5/19/05 6.993 4.8123 7/11/05 6.6269 4.562

2/2/05 7.1633 4.9677 3/29/05 7.1124 4.9116 5/20/05 6.9832 4.8008 7/12/05 6.7159 4.6296

2/3/05 7.1582 4.948 3/30/05 7.1429 4.9285 5/24/05 6.9589 4.787 7/13/05 6.7159 4.6296

2/4/05 7.148 4.9261 3/31/05 7.1429 4.9237 5/25/05 6.9444 4.7801 7/14/05 6.6979 4.5914

2/7/05 7.1174 4.8828 4/1/05 7.1736 4.9285 5/26/05 6.9348 4.771 7/15/05 6.6979 4.6083

2/8/05 7.0522 4.8497 4/4/05 7.1276 4.8948 5/27/05 6.9348 4.7642 7/18/05 6.6445 4.5872

2/14/05 7.1327 4.9164 4/5/05 7.1174 4.8685 5/30/05 6.9348 4.7596 7/19/05 6.6138 4.5579

2/15/05 7.1685 4.9261 4/6/05 7.1531 4.8972 5/31/05 6.9108 4.7037 7/20/05 6.605 4.5851

2/16/05 7.1994 4.9505 4/7/05 7.1633 4.914 6/1/05 6.9108 4.6795 7/21/05 6.6357 4.6211

2/17/05 7.1685 4.9603 4/8/05 7.1023 4.8709 6/2/05 6.9108 4.662 7/22/05 6.6225 4.6019

2/18/05 7.2046 4.9677 4/11/05 7.1736 4.9164 6/3/05 6.9061 4.6642 7/25/05 6.5104 4.5188

2/21/05 7.1994 4.9628 4/12/05 7.1891 4.9334 6/6/05 6.9108 4.6598 7/26/05 6.5359 4.5167

2/22/05 7.2516 5.01 4/13/05 7.1942 4.9188 6/7/05 6.9493 4.6664 7/27/05 6.5062 4.4964

2/23/05 7.2411 5.0226 4/14/05 7.1736 4.8924 6/8/05 6.9784 4.6795 7/28/05 6.5359 4.5188

2/24/05 7.2569 5.0277 4/15/05 7.1685 4.8876 6/9/05 6.9348 4.649 7/29/05 6.5789 4.5434

2/25/05 7.2569 5.015 4/18/05 7.2046 4.9285 6/10/05 6.9156 4.6425 8/1/05 6.6138 4.5683

2/28/05 7.2993 5.0378 4/19/05 7.2516 4.9529 6/13/05 6.8776 4.5935 8/2/05 6.6401 4.5788
 8/3/05 6.6313 4.5746 9/23/05 6.734 4.5704 11/17/05 6.4935 4.4053 1/11/06 6.6007 4.5188

8/4/05 6.6534 4.6168 9/26/05 6.689 4.5393 11/18/05 6.4809 4.4287 1/12/06 6.6094 4.5434

8/5/05 6.68 4.649 9/27/05 6.6667 4.529 11/21/05 6.4935 4.4524 1/13/06 6.6094 4.5147

8/8/05 6.6667 4.6339 9/28/05 6.6756 4.5372 11/22/05 6.4893 4.4326 1/16/06 6.6489 4.5475

8/9/05 6.6979 4.6447 9/29/05 6.6534 4.5455 11/23/05 6.5189 4.4723 1/17/06 6.6313 4.5475

8/10/05 6.7114 4.6425 9/30/05 6.6313 4.5331 11/24/05 6.5147 4.4643 1/18/06 6.6357 4.5517

8/11/05 6.7659 4.6642 10/3/05 6.6225 4.5086 11/25/05 6.4977 4.4425 1/19/06 6.5876 4.531

8/12/05 6.812 4.6838 10/4/05 6.6181 4.4944 11/28/05 6.4558 4.4209 1/20/06 6.5833 4.5249

8/15/05 6.8074 4.6512 10/5/05 6.6578 4.5147 11/29/05 6.5189 4.4723 1/23/06 6.6756 4.5893

8/16/05 6.8259 4.6555 10/6/05 6.6845 4.5517 11/30/05 6.4977 4.4524 1/24/06 6.689 4.6062

8/17/05 6.7981 4.6296 10/7/05 6.6756 4.583 12/1/05 6.5402 4.4504 1/25/06 6.68 4.5977

8/18/05 6.8074 4.6275 10/10/05 6.6489 4.583 12/2/05 6.5317 4.4267 1/26/06 6.6934 4.5956

8/19/05 6.7431 4.5704 10/11/05 6.592 4.5351 12/5/05 6.5402 4.4228 1/27/06 6.6756 4.5788

8/22/05 6.7797 4.5914 10/12/05 6.566 4.5147 12/6/05 6.5876 4.4563 2/3/06 6.6622 4.5249

8/23/05 6.7797 4.6168 10/13/05 6.5789 4.5167 12/7/05 6.5574 4.4425 2/6/06 6.5703 4.4863

8/24/05 6.7522 4.5893 10/14/05 6.6313 4.5372 12/8/05 6.5445 4.4287 2/7/06 6.5359 4.4763

8/25/05 6.8027 4.6382 10/17/05 6.6622 4.5558 12/9/05 6.592 4.4405 2/8/06 6.5147 4.4723

8/26/05 6.7981 4.6404 10/18/05 6.6007 4.5167 12/12/05 6.6445 4.4683 2/9/06 6.5062 4.4683

8/29/05 6.8074 4.6425 10/19/05 6.5963 4.4903 12/13/05 6.7069 4.5167 2/10/06 6.502 4.4603

8/30/05 6.7613 4.6104 10/20/05 6.6534 4.5167 12/14/05 6.7069 4.5372 2/13/06 6.4893 4.4346

9/1/05 6.8074 4.6577 10/21/05 6.7069 4.5517 12/15/05 6.689 4.5331 2/14/06 6.4851 4.4326

9/2/05 6.9156 4.7192 10/24/05 6.6711 4.5065 12/16/05 6.6756 4.5269 2/15/06 6.4558 4.4346

9/5/05 6.9493 4.717 10/25/05 6.6756 4.5167 12/19/05 6.689 4.5413 2/16/06 6.4683 4.4209

9/6/05 6.9252 4.6926 10/26/05 6.7114 4.5579 12/20/05 6.6578 4.529 2/17/06 6.4599 4.4228

9/7/05 6.9493 4.717 10/27/05 6.7385 4.5725 12/21/05 6.6401 4.4903 2/20/06 6.4893 4.4464

9/8/05 6.9252 4.6838 10/28/05 6.734 4.5914 12/22/05 6.5876 4.4703 2/21/06 6.4809 4.4307

9/9/05 6.9204 4.6838 10/31/05 6.7069 4.5537 12/23/05 6.5746 4.4903 2/22/06 6.4935 4.4346

9/12/05 6.8871 4.6447 11/2/05 6.6711 4.5455 12/27/05 6.5445 4.4763 2/23/06 6.4893 4.4248

9/13/05 6.8634 4.6339 11/7/05 6.5963 4.4524 12/28/05 6.5746 4.5025 2/24/06 6.5104 4.4267

9/14/05 6.8823 4.6339 11/8/05 6.5574 4.4307 12/29/05 6.5147 4.4863 2/27/06 6.4641 4.4014

9/15/05 6.8493 4.6041 11/9/05 6.5833 4.4464 12/30/05 6.5232 4.4823 2/28/06 6.4599 4.4033

9/16/05 6.8259 4.6275 11/10/05 6.5876 4.4464 1/3/06 6.5317 4.4903 3/1/06 6.5062 4.4287

9/19/05 6.7843 4.5704 11/11/05 6.5833 4.4209 1/4/06 6.6007 4.5475 3/2/06 6.4935 4.4248

9/20/05 6.8074 4.5809 11/14/05 6.592 4.4405 1/5/06 6.592 4.5434 3/3/06 6.4893 4.4543

9/21/05 6.8027 4.5956 11/15/05 6.5703 4.4189 1/6/06 6.5789 4.5372 3/6/06 6.5232 4.4743

9/22/05 6.8776 4.6447 11/16/05 6.5531 4.4287 1/9/06 6.6357 4.5393 3/7/06 6.4767 4.4366
 3/8/06 6.4767 4.4307 4/28/06 6.5402 4.5517 6/22/06 6.7385 4.6232 8/11/06 6.9589 4.6948

3/9/06 6.4683 4.4444 5/2/06 6.605 4.5537 6/23/06 6.7295 4.6296 8/14/06 6.9638 4.6926

3/10/06 6.4558 4.4307 5/3/06 6.6313 4.5558 6/26/06 6.734 4.6425 8/15/06 6.9541 4.6838

3/13/06 6.4267 4.4484 5/4/06 6.6357 4.5517 6/27/06 6.7204 4.6404 8/16/06 6.9686 4.7103

3/14/06 6.4475 4.4484 5/5/06 6.6711 4.5788 6/28/06 6.6979 4.6296 8/17/06 6.9735 4.7281

3/15/06 6.4683 4.4563 5/8/06 6.689 4.5809 6/29/06 6.6934 4.6275 8/18/06 6.9156 4.7125

3/16/06 6.4725 4.4663 5/9/06 6.6578 4.5558 6/30/06 6.7249 4.6707 8/21/06 6.9396 4.7281

3/17/06 6.4935 4.5025 5/10/06 6.6979 4.5809 7/3/06 6.7568 4.6795 8/22/06 6.9493 4.7281

3/20/06 6.502 4.5045 5/15/06 6.8306 4.6533 7/4/06 6.7159 4.6664 8/23/06 6.9493 4.7103

3/21/06 6.4725 4.4863 5/16/06 6.812 4.6404 7/5/06 6.7204 4.6555 8/24/06 6.9493 4.697

3/22/06 6.4599 4.4623 5/17/06 6.7797 4.6125 7/6/06 6.7249 4.6685 8/25/06 6.9348 4.6992

3/23/06 6.435 4.4524 5/18/06 6.7889 4.6019 7/7/06 6.7069 4.6642 8/28/06 6.9735 4.7148

3/24/06 6.402 4.4228 5/19/06 6.7981 4.6232 7/10/06 6.7385 4.662 8/29/06 6.993 4.7192

3/27/06 6.4516 4.4484 5/22/06 6.8074 4.6318 7/11/06 6.7204 4.6468 8/30/06 6.993 4.7214

3/28/06 6.4558 4.4425 5/23/06 6.8074 4.6425 7/12/06 6.7476 4.662 9/1/06 6.9979 4.7081

3/29/06 6.4226 4.4326 5/24/06 6.8446 4.6664 7/13/06 6.7295 4.6533 9/4/06 6.9735 4.7015

3/30/06 6.4144 4.4524 5/25/06 6.8074 4.6512 7/14/06 6.7568 4.6533 9/5/06 6.93 4.6816

3/31/06 6.4144 4.4703 5/26/06 6.8259 4.6707 7/17/06 6.7613 4.6555 9/6/06 6.9013 4.6773

4/3/06 6.3613 4.4385 5/29/06 6.7568 4.6296 7/18/06 6.7114 4.6189 9/7/06 6.8681 4.6729

4/4/06 6.4144 4.4723 5/30/06 6.7889 4.6533 7/19/06 6.7476 4.6147 9/8/06 6.854 4.6512

4/5/06 6.4599 4.5004 5/31/06 6.8306 4.6729 7/20/06 6.7981 4.6404 9/11/06 6.8634 4.6642

4/6/06 6.4309 4.5086 6/1/06 6.7889 4.6512 7/21/06 6.8213 4.6598 9/12/06 6.8634 4.6729

4/7/06 6.4226 4.4703 6/2/06 6.7843 4.6642 7/24/06 6.8213 4.6577 9/13/06 6.8823 4.6555

4/10/06 6.4061 4.4464 6/5/06 6.854 4.7103 7/25/06 6.8306 4.6685 9/14/06 6.9013 4.6598

4/12/06 6.4309 4.4563 6/6/06 6.8306 4.7081 7/26/06 6.7751 4.6296 9/15/06 6.9252 4.6707

4/13/06 6.4391 4.4484 6/7/06 6.8027 4.6882 7/27/06 6.8259 4.6751 9/18/06 6.93 4.6642

4/14/06 6.435 4.4444 6/8/06 6.7981 4.6882 7/28/06 6.8259 4.6577 9/19/06 6.9204 4.6685

4/17/06 6.4516 4.4703 6/9/06 6.7613 4.6425 7/31/06 6.8166 4.662 9/20/06 6.9204 4.6598

4/18/06 6.502 4.4924 6/12/06 6.7705 4.6361 8/1/06 6.854 4.6773 9/21/06 6.9541 4.6729

4/19/06 6.5317 4.5249 6/13/06 6.7889 4.6339 8/2/06 6.8871 4.7015 9/22/06 7.0028 4.7125

4/20/06 6.5488 4.5228 6/14/06 6.7705 4.6275 8/3/06 6.9013 4.6992 9/25/06 6.9979 4.7015

4/21/06 6.5062 4.4984 6/15/06 6.7431 4.6104 8/4/06 6.9493 4.7059 9/26/06 6.993 4.6904

4/24/06 6.5317 4.5188 6/16/06 6.7613 4.6147 8/7/06 6.9881 4.717 9/27/06 6.9735 4.6795

4/25/06 6.5062 4.5147 6/19/06 6.7522 4.6104 8/8/06 6.9832 4.7059 9/28/06 6.9348 4.6882

4/26/06 6.4935 4.5188 6/20/06 6.7568 4.6104 8/9/06 7.0028 4.7148 9/29/06 6.8918 4.6729

4/27/06 6.4725 4.5147 6/21/06 6.7659 4.6275 8/10/06 6.9541 4.7037 10/2/06 6.9013 4.6773
 10/3/06 6.9638 4.6992 11/28/06 7.0721 4.7847 1/22/07 6.9156 4.5413 3/16/07 6.8166 4.6707

10/4/06 6.9589 4.6926 11/29/06 7.0771 4.7847 1/23/07 6.9396 4.5413 3/19/07 6.8027 4.6577

10/5/06 6.9541 4.686 11/30/06 7.0671 4.7733 1/24/07 6.9108 4.5558 3/20/07 6.812 4.6533

10/6/06 6.9156 4.6795 12/1/06 7.0922 4.771 1/25/07 6.8966 4.5455 3/21/07 6.8306 4.6296

10/9/06 6.8966 4.6533 12/4/06 7.0922 4.7733 1/26/07 6.8966 4.5249 3/22/07 6.8166 4.6339

10/10/06 6.8918 4.6512 12/5/06 7.0373 4.7393 1/29/07 6.8634 4.5269 3/23/07 6.812 4.6189

10/11/06 6.8587 4.6361 12/6/06 6.9832 4.717 1/30/07 6.8871 4.5393 3/26/07 6.7684 4.5795

10/12/06 6.8729 4.6404 12/7/06 6.9735 4.7192 1/31/07 6.854 4.5351 3/27/07 6.7884 4.6077

10/13/06 6.8587 4.6275 12/8/06 6.9638 4.7125 2/2/07 6.8823 4.5558 3/28/07 6.7909 4.6157

10/16/06 6.8493 4.6083 12/11/06 6.9493 4.6948 2/5/07 6.8823 4.5331 3/29/07 6.7881 4.6076

10/17/06 6.854 4.6125 12/12/06 6.9348 4.6838 2/6/07 6.8587 4.5188 3/30/07 6.7664 4.6035

10/18/06 6.8776 4.6083 12/13/06 6.9881 4.7059 2/7/07 6.8871 4.5351 4/2/07 6.8264 4.6193

10/20/06 6.9013 4.6404 12/14/06 6.9832 4.6926 2/8/07 6.8823 4.5455 4/3/07 6.8499 4.6253

10/26/06 6.9061 4.6382 12/15/06 6.9686 4.6751 2/9/07 6.8166 4.5434 4/4/07 6.8315 4.617

10/27/06 6.8918 4.6275 12/18/06 6.9541 4.6577 2/12/07 6.8213 4.5517 4/5/07 6.8087 4.6119

10/30/06 6.9108 4.6339 12/19/06 6.9979 4.7037 2/13/07 6.8306 4.5496 4/6/07 6.7992 4.6284

10/31/06 6.93 4.6361 12/20/06 6.9832 4.6816 2/14/07 6.8259 4.5746 4/9/07 6.7703 4.6095

11/1/06 6.9493 4.6468 12/21/06 6.9735 4.6795 2/15/07 6.8634 4.5893 4/10/07 6.7921 4.6219

11/2/06 6.9589 4.6598 12/22/06 6.9444 4.6664 2/16/07 6.8166 4.5893 4/11/07 6.8225 4.6327

11/3/06 6.9541 4.6577 12/26/06 6.9348 4.6468 2/21/07 6.8353 4.5956 4/12/07 6.8042 4.6343

11/6/06 6.9493 4.6512 12/27/06 6.9348 4.6533 2/22/07 6.8074 4.5725 4/13/07 6.8344 4.6538

11/7/06 6.9493 4.6533 12/28/06 6.9108 4.6361 2/23/07 6.8446 4.5872 4/16/07 6.8508 4.6626

11/8/06 6.9493 4.6577 12/29/06 6.9204 4.6404 2/26/07 6.8587 4.6019 4/17/07 6.8689 4.6532

11/9/06 6.9541 4.6598 1/3/07 6.9252 4.6642 2/27/07 6.8446 4.5977 4/18/07 6.8994 4.6667

11/10/06 6.9444 4.6795 1/4/07 6.8681 4.6361 2/28/07 6.8634 4.6296 4/19/07 6.8672 4.6587

11/13/06 6.9541 4.6751 1/5/07 6.8259 4.6041 3/1/07 6.8729 4.6339 4/20/07 6.8456 4.6538

11/14/06 6.9252 4.6664 1/8/07 6.7935 4.5725 3/2/07 6.8729 4.6296 4/23/07 6.8401 4.6411

11/15/06 6.9108 4.6773 1/9/07 6.8166 4.5746 3/5/07 6.7659 4.6253 4/24/07 6.8353 4.6423

11/16/06 6.8966 4.6838 1/10/07 6.8213 4.5662 3/6/07 6.7797 4.6125 4/25/07 6.8564 4.6661

11/17/06 6.8871 4.6685 1/11/07 6.7981 4.5558 3/7/07 6.7751 4.6083 4/27/07 6.8202 4.6555

11/20/06 6.9156 4.6838 1/12/07 6.8493 4.5393 3/8/07 6.7843 4.6211 4/30/07 6.8094 4.6526

11/21/06 6.9252 4.6816 1/15/07 6.8776 4.5372 3/9/07 6.7613 4.6083 5/3/07 6.8165 4.6544

11/22/06 6.9396 4.6882 1/16/07 6.8871 4.5393 3/12/07 6.7843 4.5956 5/4/07 6.7938 4.6397

11/23/06 6.9638 4.7059 1/17/07 6.8776 4.5249 3/13/07 6.7705 4.6232 5/7/07 6.8164 4.6456

11/24/06 6.9784 4.7214 1/18/07 6.9156 4.5413 3/14/07 6.7568 4.6361 5/8/07 6.7906 4.6259

11/27/06 7.0472 4.7755 1/19/07 6.9156 4.5455 3/15/07 6.7889 4.6425 5/9/07 6.7708 4.608
5/10/07 6.7719 4.6073 6/29/07 6.9179 4.6509 8/20/07 6.9368 4.7087 10/10/07 6.899 4.77

5/11/07 6.7462 4.5957 7/2/07 6.9046 4.6613 8/21/07 6.9231 4.711 10/11/07 6.8698 4.7831

5/14/07 6.7362 4.6046 7/3/07 6.9543 4.6908 8/22/07 6.9112 4.6975 10/12/07 6.8413 4.7835

5/15/07 6.7272 4.6062 7/4/07 6.9547 4.6933 8/23/07 6.9581 4.7203 10/16/07 6.8775 4.7952

5/16/07 6.7517 4.6242 7/5/07 6.9497 4.7033 8/24/07 6.9895 4.7404 10/17/07 6.8798 4.7944

5/17/07 6.7263 4.6048 7/6/07 6.9299 4.6888 8/27/07 7.0204 4.7584 10/18/07 6.8873 4.7984

5/18/07 6.7039 4.5895 7/9/07 6.9343 4.6916 8/28/07 7.0106 4.7693 10/19/07 6.8753 4.8014

5/21/07 6.6924 4.5811 7/10/07 6.9366 4.6956 8/29/07 7.0279 4.7615 10/22/07 6.913 4.8281

5/22/07 6.6831 4.5614 7/11/07 6.9978 4.7403 8/30/07 7.0458 4.7757 10/23/07 6.8916 4.7977

5/23/07 6.6973 4.5519 7/12/07 7.0209 4.7594 9/3/07 7.0688 4.7781 10/24/07 6.9057 4.7969

5/24/07 6.7317 4.554 7/13/07 7 4.7505 9/4/07 7.0712 4.7707 10/25/07 6.8756 4.7919

5/25/07 6.7347 4.557 7/16/07 7.0126 4.747 9/5/07 7.0442 4.7686 10/26/07 6.8887 4.8131

5/28/07 6.7189 4.5577 7/17/07 7.04 4.7505 9/6/07 7.0984 4.7875 10/29/07 6.8736 4.8186

5/29/07 6.7576 4.5792 7/18/07 7.0816 4.7581 9/7/07 7.0779 4.7978 10/30/07 6.9031 4.8168

5/30/07 6.7286 4.5718 7/19/07 7.0429 4.747 9/10/07 7.1241 4.8413 10/31/07 6.9218 4.824

5/31/07 6.7094 4.5669 7/20/07 7 4.7031 9/11/07 7.1319 4.8489 11/1/07 6.9269 4.8093

6/1/07 6.7261 4.5689 7/23/07 7.013 4.71 9/12/07 7.1139 4.8436 11/2/07 6.9737 4.8414

6/4/07 6.7348 4.5658 7/24/07 7.0189 4.7019 9/13/07 7.0542 4.8469 11/5/07 6.9839 4.8522

6/5/07 6.7882 4.6012 7/25/07 7.0319 4.7065 9/14/07 7.0233 4.8321 11/6/07 6.9722 4.8507

6/6/07 6.8118 4.624 7/26/07 7.0398 4.7171 9/17/07 6.9639 4.8377 11/7/07 6.9839 4.8801

6/7/07 6.8231 4.6236 7/27/07 7.0491 4.7303 9/18/07 6.9542 4.8365 11/9/07 7.0063 4.8823

6/8/07 6.8284 4.6415 7/30/07 7.0185 4.7348 9/19/07 6.9287 4.8266 11/12/07 6.9354 4.8751

6/11/07 6.83 4.6309 7/31/07 7.0194 4.7354 9/20/07 6.9217 4.842 11/13/07 6.9177 4.8901

6/12/07 6.7894 4.5947 8/1/07 7.0266 4.742 9/21/07 6.9408 4.8483 11/14/07 6.9572 4.9091

6/13/07 6.8455 4.6139 8/2/07 7.0381 4.7406 9/24/07 6.9468 4.8368 11/15/07 6.9304 4.9378

6/14/07 6.822 4.6089 8/3/07 7.0469 4.7404 9/25/07 6.9158 4.8408 11/16/07 6.9018 4.9355

6/15/07 6.8191 4.6087 8/6/07 7.0813 4.7936 9/26/07 6.9011 4.8386 11/19/07 6.8957 4.933

6/18/07 6.791 4.5876 8/7/07 7.0253 4.7819 9/27/07 6.9097 4.8323 11/20/07 6.923 4.9574

6/19/07 6.8181 4.6064 8/8/07 6.9951 4.753 9/28/07 6.9169 4.834 11/21/07 6.9699 5.0016

6/20/07 6.8273 4.6037 8/9/07 7.0617 4.7792 10/1/07 6.9387 4.833 11/22/07 6.9855 5.0183

6/21/07 6.8829 4.6252 8/10/07 7.026 4.7593 10/2/07 6.9418 4.8314 11/23/07 6.9367 4.9914

6/22/07 6.8951 4.637 8/13/07 7.0086 4.746 10/3/07 6.9467 4.8324 11/26/07 6.9344 4.9822

6/25/07 6.9305 4.6628 8/14/07 6.962 4.7261 10/4/07 6.9349 4.8171 11/27/07 6.9753 4.9982

6/26/07 6.948 4.6759 8/15/07 6.9333 4.7056 10/5/07 6.9304 4.8006 11/28/07 6.9641 4.9794

6/27/07 6.9459 4.6769 8/16/07 6.9579 4.7088 10/8/07 6.9112 4.7817 11/29/07 6.9669 4.9682

6/28/07 6.9383 4.6652 8/17/07 6.9437 4.722 10/9/07 6.909 4.7699 11/30/07 6.9435 4.9566
 12/3/07 6.8903 4.9112 12/11/07 6.7826 4.8749 12/19/07 6.7558 4.8201 12/31/07 6.6116 4.8711

12/4/07 6.9006 4.8959 12/12/07 6.7746 4.8666 12/21/07 6.6478 4.8153

12/5/07 6.8317 4.9224 12/13/07 6.7613 4.8706 12/24/07 6.6194 4.8059

12/6/07 6.778 4.8761 12/14/07 6.756 4.8388 12/26/07 6.6155 4.8165

12/7/07 6.7359 4.8579 12/17/07 6.7237 4.8044 12/27/07 6.6375 4.8359

12/10/07 6.7632 4.8602 12/18/07 6.7645 4.8194 12/28/07 6.626 4.8606

MYR/GBP MYR/EUR
MYR/GBP MYR/EUR
Average 6.873230933 4.6889479
Average 6.873230933 4.6889479

Comparison Chart
8
7
Exchange Rates Value

6
5
4
3
2
1
0

Date

MYR/GBP MYR/EUR

Calculating the deviation, deviation squared, standard deviation, and the deviation of x multiplied
to the deviation of y; (See the next page)
 (𝑥 − 𝑥̅ ) (𝑥 − 𝑥̅ )2 (𝑦 − 𝑦̅) (𝑦 − 𝑦̅)2 (𝑥 − 𝑥̅ )(𝑦 − 𝑦̅)

Total -1.6092E-11 40.19336685 -6.32294E-12 25.08857084 26.89911955

sqrt 6.339823881 5.008849253

Therefore, calculating correlation:

∑(𝑥 − 𝑥̅ )(𝑦 − 𝑦̅)

𝐶𝑜𝑟𝑟𝑒𝑙𝑎𝑡𝑖𝑜𝑛 =
√∑(𝑥 − 𝑥̅ )2 ∑(𝑦 − 𝑦̅)2

26.89911955
𝐶𝑜𝑟𝑟𝑒𝑙𝑎𝑡𝑖𝑜𝑛 =
√40.19336685 × 25.08857084

𝐶𝑜𝑟𝑟𝑒𝑙𝑎𝑡𝑖𝑜𝑛 = 0.8470770399

To make sure that the manual calculation is correct, we also check it using the excel correlation
function → by typing:

→ B3:B988 is the data for MYR/GBP while C3:C988 is the data for MYR/EUR

In conclusion, the correlation between exchange rate of MYR/GBP and MYR/EUR is

0.8470770399. This shows that the correlation between the exchange rates is strong as the value
is close to 1. They have fairly strong positive relationship with each other. Positive correlation is
when the correlation is greater than 0 and both variables move in the same direction with same
magnitude. As shown in the comparison chart, the exchange rates are both stable without huge
fluctuations. The exchange rate of MYR/ GBP and MYR/EUR move together by the same
direction and percentage. Therefore, as one increases, the other increases as well.
2. Choose any 4 US listed stocks, and get their beta as listed under the Key Statistics section
of Yahoo! Finance. Compute the expected return on an equally weighted portfolio of the
4 stocks as predicted by the Capital Asset Pricing Model (CAPM) using the current 3-
month Treasury bill rate as the risk-free rate and the return on the S&P500 index from
the past 10 years as the market return. To calculate market portfolio return, you need to
solve for R, in the following equation:

S&P-10 (1+R)10 = S&P now

(Hint: You need to calculate the portfolio beta). (10 marks)

Beta Weightage in Weighted

US listed stocks (5Y Monthly) Portfolio Beta
(1) (2) (1) × (2)
1
Amazon.com, Inc. (AMZN) 1.16 = 0.25 0.29
4

Netflix, Inc. (NFLX) 0.71 0.25 0.1775

Tesla, Inc. (TSLA) 1.89 0.25 0.4725
Walmart Inc. (WMT) 0.50 0.25 0.125
Portfolio Beta 1.065

The expected return on an equally weighted portfolio as predicted by CAPM:

E(Ri) = Rf + βi [E(Rm) - Rf]

Where E(Ri) = Expected return on portfolio i

Rf = Risk-free rate of interest

βi = Beta of portfolio i

E(Rm) = Expected return on the portfolio market

1. To calculate market portfolio return, we need to solve for R, in the following equation:

S&P-10 (1+R)10 = S&P now

Based on historical data provided by Yahoo! Finance, the S&P 500 index as of October 28, 2021
shows an adjusted closing price of 4,596.42 while the adjusted closing price of ten years ago on
October 28, 2011 was 1,285.09. Therefore;
S&P now = 4,596.42 and S&P-10 (1+R)10 = 1,285.09
S&P-10 (1+R)10 = S&P now

1,285.09 × (1+R)10 = 4,596.42

(1+R)10 = 4,596.42/1,285.09

(1+R)10 = 3.576730034

1+R = 1.135922275

R = 1.135922275 – 1

R = 0.135922275 (Multiply by 100 to get the percentage value)

R = 13.59%

Therefore, E(Rm) = 13.59%

2. Using the current 3-month Treasury bill rate as the risk-free rate:

The current 3-month treasury bill rate is 0.06%, taken from the official website of the United States
Government, (U.S. Department of The Treasury, 2021).

Therefore, Rf = 0.06%
The expected return of the 4 US listed stocks using the CAPM model:

1. Amazon.com, Inc. (AMZN)

E(RAMZN) = Rf + βAMZN × [E(Rm) - Rf]

= 0.06% + 1.16 × (13.59% - 0.06%)

= 0.0006 + 1.16 × (0.1353)

= 0.157548 (Multiply by 100 to get the percentage value)

= 15.75%

2. Netflix, Inc. (NFLX)

E(RNFLX) = Rf + βNFLX × [E(Rm) - Rf]

= 0.06% + 0.71 × (13.59% - 0.06%)

= 0.0006 + 0.71 × (0.1353)

= 0.096663 (Multiply by 100 to get the percentage value)

= 9.67%

3. Tesla, Inc. (TSLA)

E(RTSLA) = Rf + βTSLA × [E(Rm) - Rf]

= 0.06% + 1.89 × (13.59% - 0.06%)

= 0.0006 + 1.89 × (0.1353)

= 0.256317 (Multiply by 100 to get the percentage value)

= 25.63%
4. Walmart Inc. (WMT)

E(RWMT) = Rf + βWMT × [E(Rm) - Rf]

= 0.06% + 0.50 × (13.59% - 0.06%)

= 0.0006 + 0.50 × (0.1353)

= 0.06825 (Multiply by 100 to get the percentage value)

= 6.83%

The equally weighted portfolio of the 4 US listed stocks as predicted by the CAPM model:

E(Rp) = Rf + βp [E(Rm) - Rf]

= 0.06% + 1.065 (13.59% - 0.02%)

= 0.0006 + 1.065 (0.1353)

= 0.1446945

= 14.47%

Hence, the expected return on an equally weighted portfolio of the 4 US listed stocks as predicted
by the Capital Asset Pricing Model (CAPM) using the current 3-month Treasury bill rate as the
risk-free rate and the return on the S&P500 index from the past 10 years as the market return is
14.47%

Conclusion

In a nutshell, the capital asset pricing model (CAPM) is actually a theoretical asset pricing
model which says that systematic risk is what determines the expected return. Systematic risk, also
known as market risk or non-diversifiable risk, is a component of overall risk produced by market
conditions that influence all businesses and is beyond any company's or entity's control. Inflation,
political turmoil, conflict, currency value fluctuations, and so on are examples of market forces.
Even with a well-diversified portfolio, systemic risk cannot be eliminated, and all assets are subject
to it.
 The sensitivity or responsiveness of the changes of stock's return towards the changes in
the return of the market portfolio is evaluated by beta, which is the sensitivity or responsiveness
of the stock's return to the overall market return. Stocks with a beta larger than 1 are highly
sensitive to the market and, as a result, have a higher market covariance. They grow faster than the
other equities in a bull market. In a bad market, however, they also fall quicker. As a result, they
are dangerous. Because investors need to be rewarded for the degree of risk they are taking, the
expected return for these companies would be greater. Stocks with a beta of less than one, on the
other hand, are regarded as less volatile. As a result, the expected returns on these equities are
often smaller.

For the research, Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX), Tesla, Inc. (TSLA),
and Walmart Inc. (WMT) are the four US-listed stocks that we have chosen. The betas for each
listed stock are 1.16, 0.71, 1.89, and 0.50 respectively and the expected returns are 15.75%, 9.67%,
25.63%, and 6.83% respectively. From the beta itself, we can see that Walmart Inc. has the smallest
beta. Both Walmart Inc. and Netflix, Inc. have a beta of less than 1, which means the stock is less
risky and less volatile, but both yields a lower expected return than stocks that have a beta of more
than 1. The other 2 companies, have betas greater than 1, indicating that they are risky stocks with
higher volatility but generate higher expected returns compared to Netflix, Inc and Walmart Inc.
If we equally weighted the portfolio for these 4 companies, the portfolio beta is greater than 1
which is 1.065 with an expected return of 14.47%. From these findings, we can conclude that when
the four US listed stocks are combined into a portfolio, the risk remains significant because the
beta is greater than 1. Although it will increase their overall portfolio risk, it will give them the
possibility to generate more money.
3. Do an internet search on the term “stochastic oscillator”. Explain how this technique
might be used by a technical analyst investigating a stock. What is the economic intuition
behind the measure? (10 marks)

Stochastic oscillator is measure of the momentum that compares closing price which is the
cash value of the last transacted price before the market closes officially for any normal trading,
of a security to its number of prices over a period of time. It can be used to determine the maximum
and minimum of the stock’s range. In this way if a trader is bullish on a stock, then the trader
would use the stochastic oscillator to determine a entry point which is indication that he is buying
the stock when the stock is shown to be oversold. On the other hand, if a trader is bearish, the
trader could use the oscillator to find an entry point for a short position which indicates that the
trader sells when the stock is overbought. This oscillator could also be used to find a reversal in
the highs and lows of the stock prices to his own liking to determine a divergence point to show
its downtrend and uptrend changes.

The stochastic oscillator is different from the Relative Strength Index (RSI). The stochastic
oscillator is only used ot calculate the maximum and minimum values of the price of the stock
over the given number of days whereas the RSI is different as it the price of stock is not talen into
account as it actual returns over the given number of days. For the stochastic oscillator it is useful
when the stock price is within a trading range of value but it is weaker when the stock price is
effected by an event or sensitive towards news events.

The stochastic oscillator is calculated by subtracting the low period and multiplying it by
100. For instance, if for a 13 days period the is a high price of stock at 150, the low of 120 and th
ecurrent close of 135 then the reading of the stochastic oscillator can be calculated such as (135-
120)/(150-120)*100 which will equal to 50. By comparing the current price to the range over time,
the stochastic oscillator reflects the consistency with which the stock price closes near its recent
high or low ranges in the volatility of the stock price. Since the oscillator is bound to the range it
gives a meaning that the value of it is always in between 0 to 100. Through this value given by the
oscillator we can summarise if the stock is overbrought or oversold respectively. When the
readings is over 80 it is said that the stock has been overbought and if the readings is lower than
20 it has been said to have been oversold. However, this indications does not give a meaning thst
there would be a reversal in the trend of the stock price as sometimes the strong trends of the stock
can be maintained for an extended period of time. Instead in place of this the traders could look to
changes in the stochastic oscillator for clues about future trend shifts.

Besides that, economic intuition is considered to be a way of thinking that leads people to
subconsciously choose to see things in a logically correct way (rational) rather than by natural
instinct (emotional). On this basis, economic intuition is the ability to match complex social
realities with these simple logics. Every economic theory provides a perspective on a problem, and
there is often more than one correct perspective on a problem. When faced with a choice, people
with economic intuition will unconsciously follow their subconscious logic to weigh up the pros
and cons of the choice and then choose the side that is most beneficial to them.

As mentioned earlier, stochastic oscillators can help investors to visually detect and
analysis changes in stock and market trends, thus helping them to prepare for upcoming changes.
At the same time, because the stochastic oscillator is easily perceived by non-technical investors,
it can help economists analyse macro trends. This technique is simple to operate, releases clear
signals and yields highly reliable and highly applicable results. Given these characteristics, the
stochastic oscillator is arguably the most popular technical indicator, and its choice by users as a
reference is a result of their choice to use logical thinking rather than natural instincts when
conducting financial activities.

In conclusion, stochastic oscillators are a very good tool to analyse fluctuations of certain
instrument. Although, they have some limitations, as a whole, stochastic oscillators provide usage
to the traders and technical analyst in the trading world. Moreover, the use of stochastic oscillators
can be considered as an expression of economic intuition too.
APPENDIX

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