FINANCIAL MARKET INVESTMENT DECISIONS: PARAMETRIC AND FINANCIAL MARKET INVESTMENT DECISIONS: PARAMETRIC AND FINANCIAL MARKET INVESTMENT DECISIONS: PARAMETRIC AND FINANCIAL MARKET INVESTMENT DECISIONS: PARAMETRIC AND FINANCIAL MARKET INVESTMENT DECISIONS:

Abstract

Fluctuations of stock market depends primarily on fundamental and technical factors and is based on the risk and return factors like time, contracts, sudden fluctuations etc., involved in every asset and stock. By modelling and analysing the data which explains the economic phenomena and market trends, the risk of investment can be reduced resulting in higher return. This is very important because the fluctuations in the market can cause huge losses to the individuals as well as the economy of a country. Parametric models like Auto Regressive Conditional Heteroscedastic/ General Auto Regressive Conditional Heteroscedastic and Non-Parametric smoothing techniques are applied to predict the returns and reduce the residuals.