Learn about stock volatility, ARCH and GARCH model and how GARCH model analyzes volatility. — Volatility Volatility is the standard deviation of probability distribution of log returns. It is the measure of the spread of this particular distribution. Volatility gives a sense of range of values, log returns are likely to fall into. Volatility can be used for : Measuring risks Defining position sizes

Learn about advanced methods for time series analysis including ARMA, ARIMA. — In this series, we will cover the following ways to perform time-series analysis- Random Walk Moving Averages Model (MA Model) Autoregression Model (AR Model) Autoregressive Moving Averages Model (ARMA Model) Autoregressive Integrated Moving Averages (ARIMA Model) Random Walk Model The random walk hypothesis is a financial theory stating that stock market prices evolve…

Learn about ETFs and how they are used by investors. — In this article, we will learn about the Exchange Traded Funds (ETFs) and how they work. To understand more about ETFs, let us first understand few drawbacks of open-ended and close-ended mutual funds. You can read more about what are open-ended and close-ended mutual funds in my post here. Drawbacks of Mutual Funds Drawbacks of Open-ended Mutual Funds

Gain an overview of Stocks, Indices and Funds. — Index/Indices Overview Indices refer to an aggregated value of a group of stocks as a single number. For example, we have S&P500 and DJIA (Dow Jones Industrial Average) for USA, NIKKEI and HANG SENG for Asia and FTSE, EURO STOXX for Europe. These are all example of indices. Indices are created by…

Learn about Pairs Trading and study tools used to identify stock pairs and how to make trading decisions. — Mean Reversion Trading The two most popular types of trading strategies are Momentum and Mean Reversion. You can read more about the Momentum Trading strategy in my post here. …

Learn about regression and how regression relates to trading and other advanced methods. — This series focuses on two main points: Checking and transforming data. Regression. There are some visual ways to check if a distribution is normally distributed or not: Box-whisker plots helps us visually check if a distribution is symmetric or skewed. A histogram lets us check if a distribution is symmetric/skewed…

Learn about the overall quant workflow, including alpha signal generation, alpha combination and trading. — A hypothesis is an idea for a way to profit from trading. This hypothesis goes through a several phases of rigorous testing. After coming up with a hypothesis, next comes the research phase. In the research phase, we decide what set of positions to enter, on which assets and at…

Learn about basic terminologies used while analyzing stocks. Terminologies Basics Stock : An asset that represents ownership in a company. A claim on part of a corportation’s assets and earnings. There are two main types, common and preferred. Share : A single share represents partial ownership of a company relative to the…