Posted by: alok | July 29, 2005

Using JMP….

Today was one of those days, when i did nothing, except playing with JMP. JMP is a statistical analysis tool with phenomenal features. It was introduced to us by our statistics profs — Prof. Bob Stine and Prof Richard Waterman I downloaded historical stock prices (Jan 1st 2000 to till date) for all the banks listed in NSE (National Stock Exchange). I did some multivariate analysis, and found a stratling thing. There is a very strong co-relation between the bank stocks and Nifty infact the corelation is of the order of 0.9 among ICICI, IDBI, SBI, HDFC and even NIFTY.

So what do i make out of it? Probably i should not have more than 1 bank in my portfolio, it doesn’t make much sense to hold two highly co-related stocks. So what i did intutionally few days back came true. I had both ICICI and IDBI, and I did the right thing by selling of IDBI. Infact luck also favoured me, as ICICI grew at quite a fast pace in this bull run.

This is one thing which i like doing, putting together learnings from one subject to other, or in real life. Thank you Profs. for the way you taught us Statistics. I will never ever forget any concept taught by you. You taught us Statistics without using a single mathematical formula….!!!! Hope I continue to use some of your teachings.


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