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finance 1750 3day - Essay Example

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Author : jaren94

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Volatility Modelling Institution Instructor Date Study on China’s return correlation between Stock Markets and Real Estates Introduction China is one of the countries that have experienced a tremendous growth and has achieved spectacular success over the last few decades…

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finance 1750 3day

Close follow up shows that China’s economy has slightly outdone Japan’s, in terms of the GDP. This achievement suggests that in a few years to come China will only be a step behind the United States in terms of the largest economy. According to Lai and Yang’s (2009) report, after the two main stock exchanges Shenzhen Stock Exchange and Shanghai Stock Exchange that were launched in 1990, the state owned enterprises have been developed and supported by this two markets financially to a great extent. Taking a closer look at China’s stock markets and real estate it is not clear whether this two components are correlated or not. In this paper, we use volatility models to compare results between the two markets and finally establish whether the two are correlated as we further establish their potential variation effects. In this case we monthly data sets ranging from the year 2005 to 2010. From the data, several statistical test is applied to measure the rate of return on the correlation between the two markets, stock markets, and real estate. Stock Investment In general, investors purchase common stock from the stock market in terms of stock investments, which generate dividends that earn those profits or capital gain because of positive shift in the stocks’, selling price. ...
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