Stock Price and Trading Volume Essay Example | Topics and Well Written Essays - 1000 words

Stock set and Trading Volume - Essay ExampleWood, McInish, and Ord (71), had name contradicting attest, in the hurt-volume apprisalship. For they established the ratio between the price change and trading volume to be greater for the share prices downticks.Smirlock and Starks (64) had found that the relationship could unaccompanied be supported during the time intervals when they could distinguish when the new cultivation ex ante had reached the financial mart. Due to the omit of the delivery of information to the financial market and the upbeat transaction costs, small amounts of evidence found that the relation had been measlyer for the up-ticks in the price than for the downticks.Data collected over an hourly basis from an extensive market index by Jain and Joh (38), had discovered the trading volume relates dictatorially to the enormity of the price change. Findings demand shown though, that the volume is more sensitive towards the positive price changes in contrast t o the damaging price changes. Epps, Hanna, Jain, Joh and move of Smirlock and Starkes findings shown an implication of a positive correlational statistics between the price change and trading volume per se. Yings items (1) and (2) and a numerous number of researchers had found a similar positive correlation as found above.Rogalski (60) had... tedly found a positive correlation as well as Richardson, Sefcik, Thompson (58), Comiskey, Walkling and Weeks (12) all had found through tests on annual volumes of turnover and the price change to have positive traverse correlations. No such correlation had been found however by James and Edmister (39).So by looking at the empirical evidence summarized in Table 2, the two features discussed are, all the findings are from data collected from stock and bond markets, unconnected previously mentioned empirical correlations between the price change and trading volume, and the data collected has not been collected from any futures markets. The sta tistical results found are weak, certain correlations found by Rogalski were found to be low for example and there were a couple findings that were inconsistent with a positive relationship to be found. metaphysical explanations by several authors of their findings, say the association of volume with the methodical risk through to stock returns, suggested by Morgan (51). A positive correlation between the price change and trading volume had been implied by the mixture of distributions hypothesis, only if the conditional indication of the stock price procession is in proportion to the quantity of new information into the market. There is however an unclear sense as to how the above could actually work. For the MDH with indicating minority is inconsistent with the markets competent balance, since it implies that the price change expected is from the arrival of new positive information into the market.Epps (20) found that a positive price change is cause for a larger volume on share t ransactions than for the negative price changes. His assumption that the bull investors are optimists about their asset value at the close of the