Week 1 Discussion

66 unread replies.1414 replies.

Part 1
Share a very brief synopsis (2-3 sentences, 2 points) of a news story,
class topic, or other reading you have recently encountered involving
numerical or statistical questions (fivethirtyeight.com is a great source if you're stuck
for ideas). Are any of the tools we've learned so far suited to answering this question
(1 point)? If so, how? If not, why not? (3 points)

Part 2
Respond to at least two other posts in the discussion (2 points each)

https://www.fool.com/knowledge-center/how-to-calculate-the-regression-of-2-stocks-using.aspx

https://frisztado.wordpress.com/2010/11/05/koefisien-determinasi-r2-uji-f/

Dear Professor and Friends,

I want to share about one of stock investment analysis using quantitative methods of regression. I
use this method as there are lot of conspiration about stock issues. To avoid hoax news of stock I try
to apply the statistical data of the stock itself. As I become stock investment trainer, I always use
regression to know the stock price correlation with index-whether the model is significant or not. For
instance, I regress the data of infrastructure company like Adhi Karya (ADHI.JK) with Jakarta
Composite Index (JKSE). I collect the data of closing price for two years. From that, I found the
positive correlation between the growth of share price of ADHI.JK with the index of JKSE. In my
analysis, I have my confidence level of error or alpha is 5%. The result is ADHI.JK = 2.1439(x) + 0.032.
It means that, even the index of JKSE does not move, the stock price of ADHI will increase by 0.032.
It shows that ADHI.JK is a good stock in Indonesia. However, the R2 or determination coefficient for
this is 0.3479. It tells investors that 34.79% the growth of ADHI.JK is influenced by the index of JKSE.
Another 65.21% is influenced by other factors like net income, or economic condition.

The regression tool is helping me a lot to determine the model of the function. My dependent
variable is ADHI.JK, and independent variable is JKSE. After that, by putting the confidence level
(alpha) I know how to treat with that function, whether the model can be used or not. I know my
model of function is fit as the significance F is less than alpha, (0.003055 < 5%). After that, I continue
to measure the significance independent variable by measuring p-value less than alpha, (0.003055 <
5%). Not only that, I also able to make a scatter to create a trend lines between the ADHI.JK and
JKSE. If the contribution of data is close each other, the variables have strong correlation. My data
shows positive trend lines.

Therefore, the numerical data helps me to analyze the performance of ADHI.JK stock. Fortunately, by
understanding of regression methods, the data can be measured accurately. By having the
confidence level of error or alpha, we can estimate how much our error. From that, the statistics
data is very applicable in daily life, especially business performance. Because of that, I can give a
recommend to others about the performance of the stock in views of fundamental and technical
analysis.

Thank you,

Tatag Adi Sasono

REFERENCES:

https://finance.yahoo.com/quote/ADHI.JK/analysts?p=ADHI.JK

https://finance.yahoo.com/quote/%5EJKSE?p=%5EJKSE

Hi Husna,

It is a good information of how to analyze the data by using regression methods. I like the way how
you explain the step by step. I do agree with you, by regressing the data we will be able to determine
whether our function model is fit or not. In addition, the variables should be significant to make the
accuracy analysis. Isn’t it?

The most important one is we should put the confidence level of error not more than 10%. Usually,
we put the level of 5%. It will effects on how valid our data is. If you need an example of this
application in the business activities, you can take a look on my post. I regress the data of stocks
with the index. My result of the function model is fit and significant.

By this courses, I hope we can pass with excellent result and implement to our business. Because of
that, the knowledge will be useful and applicable.

Thanks,

Tatag