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Crossing Stocks and the Positive Grassmannian I: The Geometry behind Stock Market

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  • Ovidiu Racorean

Abstract

It seems to be very unlikely that all relevant information in the stock market could be fully encoded in a geometrical shape. Still,the present paper will reveal the geometry behind the stock market transactions. The prices of market index (DJIA) stock components are arranged in ascending order from the smallest one in the left to the highest in the right. In such arrangement, as stock prices changes due to daily market quotations, it could be noticed that the price of a certain stock get over /under the price of a neighbor stock. These stocks are crossing. Arranged this way, the diagram of successive stock crossings is nothing else than a permutation diagram. From this point on the financial and combinatorial concepts are netted together to build a bridge connecting the stock market to a beautiful geometrical object that will be called stock market polytope. The stock market polytope is associated with the remarkable structure of positive Grassmannian . This procedure makes all the relevant information about the stock market encoded in the geometrical shape of the stock market polytope more readable.

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File URL: http://arxiv.org/pdf/1402.1281
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Bibliographic Info

Paper provided by arXiv.org in its series Papers with number 1402.1281.

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Date of creation: Feb 2014
Date of revision: Feb 2014
Handle: RePEc:arx:papers:1402.1281

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Web page: http://arxiv.org/

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Cited by:
  1. Ovidiu Racorean, 2014. "Decoding Stock Market Behavior with the Topological Quantum Computer," Papers 1406.3531, arXiv.org.
  2. Ovidiu Racorean, 2014. "Braided and Knotted Stocks in the Stock Market: Anticipating the flash crashes," Papers 1404.6637, arXiv.org, revised Jun 2014.

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