Essay Title: 

Hypothesis a meaningful relationship with stock data

March 22, 2016 | Author: | Posted in mathematics and economics, trade

In this work we will investigate the meaningful relationship between the AMD stock at closing and DJIA at closing

Herein below the 2006 data for AMD stock and DJIA are presented

AMD DJIA

Date Opening High Low Closing

Date Opening High Low Closing

6 .28 24 ,33 24 ,46 23 ,7 23 ,89

6 .28 10944 ,59 11026 ,07 10869 ,02 10973 ,56

6 .29 24 ,1 24 ,88 23 ,86 24 ,81

6 .29 11029 ,99 11225 ,06 10975 ,16 11190 ,8

6 .30 24 ,99 24 ,99 24 [banner_entry_middle]

,16 24 ,42

6 .30 11243 ,71 11288 ,86 11100 ,11 11150 ,22

7 .3 24 ,48 24 ,72 24 ,42 24 ,6

7 .3 11199 ,93 11277 ,09 11146 ,06 11228 ,02

7 .5 24 ,31 24 ,43 23 ,83 23 ,8

7 .5 11182 ,48 11239 ,47 11083 ,94 11151 ,82

7 .6 24 ,07 24 ,39 23 ,66 23 ,83

7 .6 11158 ,22 11301 ,58 11301 ,58 11225 ,3

7 .7 22 ,81 23 ,8 22 ,45 23 ,56

7 .7 11168 ,63 11227 ,62 11040 ,32 11090 ,67

7 .10 23 ,71 23 ,91 22 ,33 22 ,51

7 .10 11130 ,53 11210 ,73 11048 ,8 11103 ,55

7 .11 22 ,35 23 ,08 22 ,02 22 ,98

7 .11 11088 ,59 11186 ,32 10987 ,33 11134 ,77

7 .12 22 ,9 23 ,08 22 ,45 22 ,84

7 .12 11135 ,09 11181 ,12 10973 ,37 11013 ,18

7 .13 22 ,73 23 ,24 22 ,1 22 ,13

7 .13 10972 ,68 11015 ,19 10790 ,82 10846 ,29

7 .14 22 ,08 22 ,3 21 ,23 21 ,6

7 .14 10839 ,17 10892 ,64 10664 ,43 10739 ,35

7 .17 21 ,35 21 ,78 20 ,79 20 ,92

7 .17 10747 ,28 10858 ,22 10668 ,35 10747 ,36

7 .18 20 ,71 21 ,19 20 ,08 20 ,55

7 .18 10787 ,62 10813 ,79 10813 ,79 10799 ,23

7 .19 20 ,78 21 ,66 20 ,38 21 ,46

7 .19 10854 ,22 11069 ,86 10791 ,14 11011 ,42

7 .20 21 ,9 22 ,1 21 ,16 21 ,65

7 .20 11026 ,79 11098 ,75 10884 ,47 10928 ,1

7 .21 19 ,78 19 ,8 18 ,23 18 ,26

7 .21 10954 ,11 10995 ,73 10778 ,58 10868 ,38

7 .24 17 ,62 17 ,73 16 ,9 17 ,39

7 .24 10923 ,61 11096 ,35 10869 ,75 11051 ,05

7 .25 17 ,48 18 ,05 17 ,183 17 ,8

7 .25 11037 ,6 11186 ,16 10937 ,38 11103 ,71

7 .26 17 ,88 18 ,5 17 ,57 18 ,25

7 .26 11066 ,25 11208 ,09 10987 ,41 11102 ,51

7 .27 18 ,3 18 ,62 18 ,01 18 ,06

7 .27 11153 ,42 11245 ,47 11040 ,8 11100 ,43

7 .28 18 19 ,1 17 ,88 19 ,1

7 .28 11154 ,38 11282 ,05 11112 ,84 11219 ,7 Let ‘s give answer to several questions

1 . Can a meaningful relationship between AMD stock at closing and DJIA at closing be hypothesized

Answer

The statistical relationship between AMD stock (closing ) and DJIA (closing ) apparently can be hypothesized in terms of Pearson correlation coefficient . This statistical relationship can be viewed as meaningful if realistic cause-effect linkage between these values exists . We can assert that , the increase (decrease ) of the DJIA yields to increase (decrease ) of the all companies stock . It is obviously , that if DJIA consists of stocks of the 30 most powerful world companies DJIA will be dollar value indicator . Change of the US dollar value affects all other companies stock

2 . What would be null and alternative hypotheses

Answer

The hypothesis will be formulated in terms of Pearson correlation coefficient . So they can be following

H0 0

H1 ? 0

Here ? is a real (populations ) Pearson correlation coefficient

3 . How would be a null hypothesis at the 95 confidence interval tested

The test statistic for this particular test is

p 0 .05 specified for our test (that corresponds to 95 confidence interval ) and n – 2 20 degrees of freedom we can find in the table Critical Values of the t Distribution ‘ that critical value is 2 .086

Since 1 .095 2 .086 then our test statistic falls inside the nonrejection region for 0 .05 and hence we cannot reject the null hypothesis . There is no evidence to conclude that there is correlation between AMD stock (closing ) and DJIA (closing

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