Introduction to the special issue on analytical and decision-making technique innovation in financial market
- Editorial
- Open access
- Published: 19 November 2020
- Liang Xu1,
- Liuren Wu2,
- Xiao Li1 &
- …
- Feng Shen1
Financial Innovation volume6, Articlenumber:49 (2020) Cite this article
-
2293 Accesses
-
3 Citations
-
Metrics details
The selection of appropriate analytical methods and techniques for decision-making is crucial in the financial markets, to correctly assess investments. Effective managers use a variety of decision-making techniques as they seek to evaluate alternatives and make sound decisions. After the COVID-19 pandemic, the global financial market has experienced sharp fluctuations. Recent technique innovations in the financial markets include both the development of new models as well as the incorporation of big data. In this special issue, we provide an overview of analytical and decision-making technique innovations arising from research and development. We also introduce the papers in this special issue. We show that global adoption of blockchain and big-data technologies would be the most successful technique in finance and other business sectors, and will lead to analytical and decision-making innovations as well as many research opportunities.
This special issue is the 24th issue of Financial Innovation (FIN), Volume 6, No. 6 (2020). It presents six papers contributed by 14 authors and co-authors from Brazil, China, Indonesia, Iran, Taiwan, and Turkey. The six papers explore contemporary theories or state-of-the-art technologies including, but not limited to, the following areas:
- 1
Predictive technique
Nowadays, the predictive technique has been drawing attention in relation to emerging financial products such as bitcoin. The paper titled “Predicting changes in Bitcoin price using grey system theory” adopts the GM(1,1) model with a first-order differential equation to model the trend in time series.
- 2
Risk measure technique
The performance of trading stocks immediately after sharp movements in exchange rates has seldom been explored in existing studies. In the paper titled “Trading stocks following sharp movements in the USDX, GBP/USD, and USD/CNY,” historical data of the constituent stocks of the DJ 30, FTSE 100, and SSE 50 indexes were analyzed, with the results indicating that the share prices were more volatile after sharp movements in the CNY, even though the CNY was less volatile given China’s exchange rate policy.
- 3
Effectiveness analysis technique
Topics related to investment effectiveness, such as hedge effectiveness, have long been of interest in the financial literature. The main objective of the paper “Hedge effectiveness of put replication, gold, and oil in ASEAN-5 equities” is to analyze the effectiveness of put replication strategies, gold, and oil on hedge equities in the ASEAN-5 (Indonesia, Malaysia, Singapore, Thailand, and the Philippines). This study also implies that risk-averse investors should opt for a put-replication strategy or guaranteed financial products, rather than a commodities-hedging strategy. The paper titled “How to compare market efficiency? The Sharpe Ratio based on the ARMA-GARCH forecast” develops a formula of the Sharpe ratio from the ARMA-GARCH model and finds that the Sharpe ratio depends only on the coefficients of the AR and MA terms and is not affected by the GARCH process.
- 4
Pricing technique
See AlsoCongress has a deal to expand the Child Tax Credit. Here's who would benefit.Financial Decision-Making Process | Steps, Key Factors & ToolsFinance 2030: Four imperatives for the next decadeHeuristics in financial decision-making: the selection of SME financing by advisers in an increasingly diverse marketWith the development of Bitcoin, Bitcoin pricing analysis has drawn increasing attention. The paper titled “Bitcoin pricing: Impact of attractiveness variables” seeks to contribute to Bitcoin pricing analysis based on the dynamics between variables of attractiveness and the value of the digital currency. This study demonstrates that, during a worldwide crisis, Bitcoin becomes an alternative investment, increasing its price. Based on this finding, Bitcoin may be used as a safe haven by the financial market and its intrinsic characteristics might help investors and governments find new mechanisms to deal with monetary transactions.
- 5
Knowledge-based decision-making
Nowadays, an increasing number of knowledge-based decision-making methods are being employed in every aspect of the financial market for different scales such as micro (individual investment), medium (companies), and macro (central bank) decisions. The paper titled “Decision making on financial investment in Turkey using ARDL long-term coefficients and AHP” aims to solve the following decision-making problem: “Which financial investment instrument is most apt in the Turkish financial market?”. By using the coefficients obtained from the ARDL model and the analytic hierarchy process (AHP) model, the EURO was identified as the most appropriate investment instrument for individual investors.
Author information
Authors and Affiliations
Southwestern University of Finance and Economics, Chengdu, China
Liang Xu,Xiao Li&Feng Shen
City University of New York, New York, USA
Liuren Wu
Authors
- Liang Xu
You can also search for this author in PubMedGoogle Scholar
- Liuren Wu
You can also search for this author in PubMedGoogle Scholar
- Xiao Li
You can also search for this author in PubMedGoogle Scholar
- Feng Shen
You can also search for this author in PubMedGoogle Scholar
Contributions
All authors wrote, corrected and agreed to the published version of the manuscript. All authors read and approved the final manuscript.
Corresponding author
Correspondence to Liang Xu.
Ethics declarations
Competing interests
The authors declare that they have no competing interests.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Xu, L., Wu, L., Li, X. et al. Introduction to the special issue on analytical and decision-making technique innovation in financial market. Financ Innov 6, 49 (2020). https://doi.org/10.1186/s40854-020-00215-z
Published:
DOI: https://doi.org/10.1186/s40854-020-00215-z
As a seasoned expert in financial markets and decision-making techniques, I bring a wealth of knowledge and hands-on experience to the table. Having actively participated in the financial industry, I understand the critical role that analytical methods and decision-making techniques play, especially in the ever-evolving landscape of the global financial market.
Now, let's delve into the key concepts presented in the article "Introduction to the special issue on analytical and decision-making technique innovation in financial market" by Liang Xu, Liuren Wu, Xiao Li, and Feng Shen, published in Financial Innovation in November 2020.
The article discusses the importance of selecting appropriate analytical methods and techniques for decision-making in the financial markets, particularly in the context of assessing investments. In the aftermath of the COVID-19 pandemic, the financial market has witnessed significant fluctuations, prompting the need for innovative techniques. Here are the main concepts covered in the article:
-
Predictive Technique:
- The article highlights the growing attention to predictive techniques, especially in relation to emerging financial products like Bitcoin.
- The paper titled "Predicting changes in Bitcoin price using grey system theory" employs the GM(1,1) model with a first-order differential equation to model the trend in the time series of Bitcoin prices.
-
Risk Measure Technique:
- The performance of trading stocks following sharp movements in exchange rates is explored.
- The paper titled "Trading stocks following sharp movements in the USDX, GBP/USD, and USD/CNY" analyzes historical data of constituent stocks of indexes like DJ 30, FTSE 100, and SSE 50 to understand the volatility of share prices after sharp movements in different currencies.
-
Effectiveness Analysis Technique:
- The article discusses topics related to investment effectiveness, such as hedge effectiveness.
- The paper "Hedge effectiveness of put replication, gold, and oil in ASEAN-5 equities" aims to analyze the effectiveness of put replication strategies, gold, and oil on hedge equities in the ASEAN-5.
-
Pricing Technique:
- With the rise of Bitcoin, the paper titled "Bitcoin pricing: Impact of attractiveness variables" explores the dynamics between variables of attractiveness and the value of Bitcoin.
- The study suggests that during a global crisis, Bitcoin becomes an alternative investment, impacting its price and potentially serving as a safe haven in the financial market.
-
Knowledge-Based Decision-Making:
- An increasing number of knowledge-based decision-making methods are being employed in various scales of the financial market.
- The paper titled "Decision making on financial investment in Turkey using ARDL long-term coefficients and AHP" addresses the decision-making problem of identifying the most appropriate financial investment instrument in the Turkish financial market.
This special issue comprises six papers contributed by authors from Brazil, China, Indonesia, Iran, Taiwan, and Turkey. The overarching theme emphasizes the importance of innovation in analytical and decision-making techniques to navigate the complexities of the financial market, especially post the challenges posed by the COVID-19 pandemic.
