Quantitative Methods Used

In this study, the Moving Average technique of Time Series Forecasting and Constraints
Optimization model are used to work out the optimal solution.

1.1 Time Series Forecasting

A Time Series model explains a quantitative variable with regard to its past observations.
It explores the historical trends and patterns (such as seasonality) of the time series
involved; and predicts the future values based on the trends and patterns identified in the
model.

One of the popular techniques of Time Series Forecasting is Moving Averages. It

provides a comprehensive approach for analyzing stationary time series such as stock
market prices.

Since Time Series model only require historical observations of a variable, it is less
costly in data collection and model estimation.

Investment managers use formal risk models to both predict the future and understand the
past.

Time Series are popular in many application areas such as Daily fluctuations of a stock
market, scientific experiments, Medical treatments, Weather conditions and so on.
Businesses often are interested in forecasting future values of a time series variable. If we
could predict future values of the stock price accurately, we could become very wealthy
investing in the stock market

Methodology Application

- Stock Market data

- The main interest is to predict the timing of future events, ie. The points at which
the stock will change the direction of its slope
- Stock prices are noisy and influenced daily by many factors

Financial Advisors have strong working relationships with their clients and give them
advice and service to help manage their assets. As part of the customization … added
analytic tools for asset allocation, stock selection and financial planning to emulate the
sophisticated tools and processes used by the full-service firms.
Consolidated trend amount major financial service providers. .. adjust the portfolios …
more realistic revenue impact
Asset services include stocks, bonds, mutual funds, transactions of several other complex
securities and products.

1.2 Limitations

The prediction of future prices from a time series of past raw stock prices has been
recognized to be a very difficult problem, such a time series may be noisy and non-
stationary, and many factors leading to price fluctuations cannot be captured precisely or
may be too difficult to be modeled.

Time series prediction problem is the prediction of future values based on the previous
values and the current value of the time series. The previous values and the current value
of the time series are used as inputs for the prediction model.

The long-term prediction is typically faced with growing uncertainties arising from
various sources. For instance, the accumulation of errors and the lack of information
make the prediction more difficult.