Analysis of DigitalX and ASX Index Prices - Business Statistics 1 Project

ECON 1030 – BUSINESS STATISTICS 1
PROJECT
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Executive Summary
This report presents the findings from the analysis of DigitalX stock index prices as
well as ASX index prices. Results showed that both the stocks have seasonal variations that
could be as a result of either natural factors or could be human such as political factors. The
average returns for DLT index was 1.664% with the highest recorded returns being 95.455%
and the lowest being -36.429%. On the other hand the average returns for the ASX was found
to be 0.069% with the highest recorded returns being 4.51% and the lowest being -5.76%.
Introduction
Distributed Ledger Technology (DLT) has captured the imagination of entrepreneurs and
policy makers. According to some, Blockchain (a feature of DLTs) has the potential to
revolutionise transactions protecting the integrity of ownership (property rights
(http://www.econlib.org/library/Enc/PropertyRights.html)). Further, pilot transactions
conducted by various banks has demonstrated tangible improvements in market efficiency –
that is large (and at times complex) transactions have been sufficiently quicker and simpler
using DLT.
These advantages suggest there could be tremendous opportunities for individuals to benefit
from this new technology by investing in companies that are successfully embracing it. One
such company is DigitalX( https://www.digitalx.com/). The aim of this study was to evaluate
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recent share price performance of this company and based on this evidence we sought to
clarify whether individuals should invest in this company.
Part A
DLT Index
In this section, we plotted a time series plot to visualize on the trend of the weekly closing
price. As can be seen, the data has some seasonality, that is, there are periods when the
closing prices are high and when the drop drastically (Cowpertwait & Metcalfe , 2009). This
could be as a result of influential factors that affect the stock’s market conditions.
Figure 1: Time series plot for DLT index
The figure 2 below presents the weekly returns for DLT closing prices. As can be seen, the
data does not appear to be normally distributed since the graph has a longer tail to the right.
The data seems to have a few outliers especially to the right of the histogram.
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