Stock Price Behavior in European Electric Power Industry in Europe

Stock price behavior in European electric power

industry in Europe

Table of Contents

Introduction 3

1. Literature review 4

1.1 Theories about price behavior, random walk hypothesis, chartist theories 4

1.2 Efficient capital markets and efficient market hypothesis 6

1.3. The aims and objectives of the study 8

2. Research methodology 9

2.1 Serial correlation method 9

2.2 Vector auto-regression model 10

3. Data analysis 11

3.1 Collecting data 11

3.2 Results and analysis 12

4. Conclusion and recommendation 19

References: 20

Introduction

Stock market is a market where publicly held companies trade their shares, in other words, where stocks are bought and sold. Stock market has a major impact on the economy as well as on companies, firms and individuals. Great part of the world's finances is connected to stock market and stock prices.

Stock price prediction can generate a profit in a limited time. But can stock price really be predicted? Does the analysis of historical data give us the idea about what we can expect? Can a company's stock prices in the past be used to forecast the trends in the future?

In this research we will analyze the historical data of stock prices of the biggest European, as well as Georgian electric power companies to find out if there are some general trends in stock price behavior.

The research starts with literature review that covers the main theories about stock price behavior in general. This is followed by methodology that was used in this research. The next part of the research focuses on data analysis and interpretation and the conclusion is given in the final part of the research.

1. Literature review

1.1 Theories about price behavior, random walk hypothesis, chartist theories

One of the first scientists who observed the price changes was a French mathematician Louis Bachelier. In his PhD thesis, "Theory of speculation", he created...