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Distances And Networks: The Case Of Mexico

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  • Linda Margarita Medina Herrera
  • Ernesto Armando Pacheco Velázquez

Abstract

The influence of six different distances on the structure of minimum spanning trees is presented in this paper. Measures of complex networks are built based on the closing prices of stocks of the main companies traded on the Mexican Stock Market. We find that the City block and Chi distances not only match, but also determine more precisely the central vertex, the level of the tree and the clusters formed by the economic sector. The trees formed using Minkowski distances have similar structures and show a disadvantage when classifying the vertices. The construction and telecommunication sectors are most important within the trees, regardless of the distance used.

Suggested Citation

  • Linda Margarita Medina Herrera & Ernesto Armando Pacheco Velázquez, 2012. "Distances And Networks: The Case Of Mexico," Accounting & Taxation, The Institute for Business and Finance Research, vol. 4(2), pages 39-48.
    • Handle: RePEc:ibf:acttax:v:4:y:2012:i:2:p:39-48
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    References listed on IDEAS

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    More about this item

    Keywords

    Stock market network. Econophysics. Distances. Minimum spanning tree.;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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