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Mutual influence of the exchange assets: practical aspects

Author

Listed:
  • Kozmenko, Serhiy
  • Plastun, Oleksiy

Abstract

The following article considers the practical use of temporary connections that arise between different exchange assets. The concrete recommendations to build a trading strategy based on the theory of market focuses are proposed. The main idea in this case is that strong positive correlation between two exchange assets let us make a conclusion that in case of big movement in one asset we can wait for equivalent changes in other exchange asset. The paper proposes the use of two types of correlations between exchange assets: “slow” (used to determine the presence of relationship between exchange assets) and “fast” (used for the definition of divergence and convergence). Based on the values of “slow” and “fast” correlation decisions on entry and exit positions can be done.

Suggested Citation

  • Kozmenko, Serhiy & Plastun, Oleksiy, 2012. "Mutual influence of the exchange assets: practical aspects," MPRA Paper 50785, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50785
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    File URL: https://mpra.ub.uni-muenchen.de/50785/1/MPRA_paper_50785.pdf
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    More about this item

    Keywords

    exchange assets; correlation analysis; fast correlation; slow correlation; forecast; price dynamic analysis; prediction; market “focus”; arbitrage; speculations.;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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