Name Roll No.

Priyank Darji 07
Hardik Nathwani 25
Shashank Pai 26
Sagar Panchal 27
Dharmik Patel 30
Kush Shah 38
Siddarth Tawde 45
 STATISTICAL ANAYASIS

Statistical analysis refers to a collection of methods used

to process large amounts of data and report overall trends.

Statistical analysis provides ways to objectively report on

how unusual an event is based on historical data.

Statistical analysis to examine the tremendous amount of

data produced every day by the stock market.
 MEASUREMENT OF RETURN

 The rate of return is the total return the investor receives

during the holding period ( the period when the security
is owned or held by the investor) stated as percentage of
the purchase price of the investment at the beginning of
the holding period.

 The general equation for calculating the total rate of

return is show below:

K = D + S.P- P.P
P.P
Probabilities are governed by five rules and range from
0 to 1
A probability can never be larger than 1

The sum total of probabilities must be equal to 1

If outcome is certain occure, it is assigned a probability of

1, and impossible outcome are assigned a probability of 0.

The possible outcomes must be mutually exclusive and

collectively exhaustive.

The future return are characterized by uncertain.

 EXCEPTED RATE OF RETURN
 The return on an investment as estimated by an asset
pricing model.
Formula :-
E(r) = probability * rate of return
For example:-
If a security has a 20% probability of providing a 10%
rate of return, a 50% probability of providing a 12% rate
of return, and a 25% probability of providing a 14% rate
of return.
• expected rate of return:-
= (.20)(10%) + (.50)(12%) + (.25)(14%)
=11.5%.
AVERAGE RATE OF RETURN (ARR)
Definition
Method of investment appraisal which determines return on investment by
totaling the cash flows (over the years for which the money was invested)
and dividing that amount by the number of years.

Example:
Ramesh spent $800,000 to buy an apartment building. After deducting all
operating expenses, real estate taxes, and insurance, he receives $65,000
in the first year, $71,000 in the second year, $69,000 in the third year, and
$70,000 in the fourth year.
Solution:-
Total net earning = 65,000 + 71,000 + 69,000 + 70,000 = 2,75,000
Now divided by 4
275000/4
=68750
ARR = 68750/800000*100
= 8.59%
 Standard deviation is a statistical term that measures the
amount of variability or dispersion around an average.

Definition of 'Standard Deviation‘

 In finance, standard deviation is applied to the annual
rate of return of an investment to measure the
investment's volatility. Standard deviation is also known
as historical volatility and is used by investors as a
gauge for the amount of expected volatility.
 Formula :-

Example :-
 FUNDAMENTAL ANALYSIS
 Meaning:-
Fundamental analysis refers to the study of basic
fundamental economic indicators which affect the
country’s economy.
 An investor using Fundamental Analysis to make
investment decisions will rely heavily on the following
sources of information:
Company Balance Sheet

Income (Profit and Loss) Statement

Annual report

Company announcements
Phase 1 :Analysis of Economy wide factor

Economic fundamental provide the most significant

information to traders. The impact of economic data tends to
be long term oriented. Economic indicators are reports
published at a fixed time intervals by government and private
organizations.

Here are some lists of economic report that have most

significant impacts on the market:
 Gross Domestic Product (GDP)

 Gross National Product (GNP)

 Inflation report

 Interest rate
Phase 2 :Analysis of Industry wide factor

Study of industry life cycle

The industry life cycle is made up of the following
stages:
1. Pioneering Phase
2. Growth Phase
3. Mature Growth Phase
4. Stabilization/Maturity Phase
5. Deceleration/Decline Phase
CONTD…
Study of qualitative and quantitative factor:-

1. Economies of scale

2. Capital Requirements

3. Government Regulation

4. Business Model

5. Management Team
Phase 2 :Analysis of Company wide factor
This is usually done by studying the company's financial
statements. From these statements a number of useful ratios
can be calculated.

 P/E Ratio

 Book Value Per Share

 Current Ratio

 Debt Ratio
 TECHNICAL ANALYSIS
• Meaning
Technical analysis is a method of evaluating securities
by analyzing the statistics generated by market activity,
such as past prices and volume.

• The field of technical analysis is based on three

assumptions:

1.The market discounts everything.

2. Price moves in trends.

3. History tends to repeat itself.

 TYPES OF CHARTS

1) Bar Charts
2) Line Charts
3) Candlestick Chart
 BIBLIOGRAPHY

 www.investopedia.com

 www.trade-ideas.com

 www.ikofx.com

 Risk management book