Stock market network reveals investor clustering

Friday, January 27, 2012 - 11:30 in Mathematics & Economics

(PhysOrg.com) -- The stock price of a company continuously changes, going up or down depending on the collective activity of a large number of investors. Although this process seems fairly straightforward, no one fully understands how this collective trading activity finds the "correct" price of a stock. Some theoretical models have been proposed to describe how different investment strategies affect price dynamics, but challenges such as investor confidentiality and complicated data mining make it difficult to gather empirical support for these models.

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