Using data to enter the Hong Kong stock market
The Hong Kong stock market has performed well throughout the first half of this year, but many investors remain cautious after price corrections in 2012 and 2013. However, many industry insiders believe that the tide is turning for Hong Kong stocks as more companies use data to enter new markets.
There are several ways you can access and analyze information and use this information to make more informed financial decisions. For example, those looking to invest in Hong Kong-listed firms now have many online tools that help them see the bigger picture when analyzing companies. Sites such as Google Finance now allow investors to compare companies with similar listed firms and track share prices quarterly and annually on a graph schedule. This means that investors can quickly assess if their investment is performing well or underperforming its peers.
Tips on how to use data in trading
If you are considering investing in the Hong Kong stock market, here are some tips that will help you be more informed and better prepared to make an informed decision:
- Understand how data is impacting your prospective company’s business model
- Gain access to group chats and online forums discussing local trends
- Keep up with the latest news in the market, such as new regulations or changes in government policies that will affect your investment.
- Research investing tools such as MYP Online which give real-time performance updates on listed firms
How to analyze the data
Once you have this kind of data directly from an exchange, the next step would be to organize it in some way so that it is easily accessible for analysis, all programs are different, but they usually follow a similar pattern.
- Filtering out irrelevant information (e.g., checking how popular stock is on one day or another)
- Organizing the filtered information according to time (monthly averages)
- Determining the statistical significance of specific factors (e.g., whether a 1% change in sales volume affects returns by 1%)
What is quantitative analysis?
In essence, quantitative analysis determines the specific factors that affect your investment decisions. These factors, like company revenue or dividend payment, are easily quantifiable and can be quickly analyzed using quantitative techniques.
Other factors, such as consumer confidence, cannot be easily analyzed. They require either subjective analysis (see below) or lots of manual work to determine their effects on returns, not to mention that it’s also challenging to know which specific companies will respond to changing consumer confidence in a positive way.
The main problem with quantitative analysis is that sometimes patterns won’t appear until after quite some time (e.g., the first financial crisis only appeared several months into the new millennium). So be sure to use your judgment on whether or not you’re looking at a trend before jumping straight in.
Using automated tools
Automated tools for evaluating stocks using data has dramatically improved lately, mainly thanks to cloud computing. By storing data online, you’re able to run hundreds of different analyses simultaneously because all your data is stored on servers instead of your local hard drive. Think about how quickly your computer runs when you have too much data on it, compared to how quickly it runs with minimal data.
One of the most important things investors can do to maximize their returns is identify new trends before they’re already ingrained in the market. Unfortunately, this data isn’t free, and quantifying it yourself requires much time-consuming work because you need historical data.
Summary
Once you’ve found the factors that affect the performance of certain stocks, then you should pay attention to them in real-time. Always combine manual analysis with automated analysis. Keep in mind, the performance is only as good as your data, so if you’re using an automated system to analyze companies and trends, be sure that they are accurate before investing. It is recommended to use a reputable online Saxo forex broker to help you interpret your data and make solid investment decisions.
