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Stock Selection Based on Fundamental Analysis Approach by Grey Relational Analysis: A Case of Turkey

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  • Mehmet Bayramoglu
  • Coskun Hamzacebi

Abstract

Determining financial assets for investment is a significant problem for investors. Especially, since it is riskier in comparison with other financial assets, selecting common stock is not only important for investors but also, it is a complicated decision-making process, because, although they agree to accept a risk, common stock investors tend to keep the risk they undertake at a given level. With this purpose, investors prefer to conduct various analysis and predictions to decide which common stocks they will invest. In this study, by using micro and macro variables, which have been determined with a fundamental analysis approach, a common stock selection is conducted for nine different corporations doing activities in ten lines of business in Borsa Istanbul. In the study, Grey Relational Analysis (GRA), which is developed in the framework of Grey System Theory, is used as a mathematical model. Therefore, a conclusion is obtained about which parameters are more important in selecting a common stock, and the efficiency of GRA Method is tested.

Suggested Citation

  • Mehmet Bayramoglu & Coskun Hamzacebi, 2016. "Stock Selection Based on Fundamental Analysis Approach by Grey Relational Analysis: A Case of Turkey," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(7), pages 178-178, July.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:7:p:178
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    References listed on IDEAS

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    1. Yamamoto, Ryuichi, 2012. "Intraday technical analysis of individual stocks on the Tokyo Stock Exchange," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 3033-3047.
    2. Jo-Hui Chen & Ting-Tzu Chang & Chao-Rung Ho & John Francis Diaz, 2014. "Grey Relational Analysis and Neural Network Forecasting of REIT returns," Quantitative Finance, Taylor & Francis Journals, vol. 14(11), pages 2033-2044, November.
    3. Albadvi, Amir & Chaharsooghi, S. Kamal & Esfahanipour, Akbar, 2007. "Decision making in stock trading: An application of PROMETHEE," European Journal of Operational Research, Elsevier, vol. 177(2), pages 673-683, March.
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    Cited by:

    1. Ikram, M. & Sroufe, Robert & Rehman, E. & Shah, S.Z.A. & Mahmoudi, A., 2020. "Do Quality, Environmental, and Social (QES) Certifications Improve International Trade? A Comparative Grey Relation Analysis of Developing vs. Developed Countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 545(C).
    2. Serhat Yuksel & Hasan Dincer & Senol Emir, 2017. "Comparing the performance of Turkish deposit banks by using DEMATEL, Grey Relational Analysis (GRA) and MOORA approaches," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 3(2), pages 26-47, December.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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