Mutual Influence of the Exchange Assets: Practical Aspects

Banks and Bank Systems, Volume 6, Issue 4, 2011

6 Pages Posted: 22 Oct 2013

See all articles by Serhiy Kozmenko

Serhiy Kozmenko

LLC "CPC "Business Perspectives"

Alex Plastun

Sumy State University

Date Written: November 20, 2011

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.

Keywords: exchange assets, correlation analysis, fast correlation, slow correlation, forecast, price dynamic analysis, prediction, market “focus”, arbitrage, speculations

JEL Classification: G10, G12

Suggested Citation

Kozmenko, Serhiy and Plastun, Alex, Mutual Influence of the Exchange Assets: Practical Aspects (November 20, 2011). Banks and Bank Systems, Volume 6, Issue 4, 2011, Available at SSRN: https://ssrn.com/abstract=2341623

Serhiy Kozmenko (Contact Author)

LLC "CPC "Business Perspectives" ( email )

10 H. Skovoroda lane
Sumy, 40022
Ukraine

Alex Plastun

Sumy State University ( email )

Rymskyi-Korsakov str., 2
Sumy, 40000
Ukraine

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