University Research: Forecasting Stock Prices in International Markets

This report delves into the critical area of forecasting stock prices within international markets, addressing key research questions such as the impact of seasonal effects, price reversals, extreme value removal, disagreement, trading volume, and price volatility. The study begins with a brief literature review, highlighting the significance of investor information, the role of equity premium, and the influence of factors like economic, political, and natural events on stock prices. The research methodology section outlines the use of secondary data, specifically from sources like Yahoo Finance and Bloomberg, focusing on the FTSE 250 index. The researcher employs a non-probability sampling technique, selecting 10 stocks from different industries within the index, using convenience sampling due to time and budget constraints. The timeframe for the research is detailed across nine weeks, covering topic selection, literature review, data accumulation, analysis, and report submission. The report aims to contribute to the understanding of stock price forecasting and provide insights for investors and risk managers.

Running head: FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
Forecasting Stock Prices in International Markets
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
Table of Contents
Research Questions:.........................................................................................................................2
Brief literature review:.....................................................................................................................2
Research methodology:...................................................................................................................3
Proposed data source:..................................................................................................................3
Proposed data sample:.................................................................................................................4
Timeframe of the research:..........................................................................................................5
References:......................................................................................................................................7

2FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
Research Questions:
The research questions those are to be answered through completing study on
“Forecasting Stock Prices in International Markets” are indicated below:
 To analyse how seasonal effects and price reversal impacts stock prices forecasting in the
international markets?
 To evaluate the impact of extreme values removal on stock prices forecasting within
global markets?
 What are the effects of disagreement, trading volume and price volatility on sock prices
forecasting of international markets?
Brief literature review:
An investor needs critical information regarding two prices, which include the existing
price of the investment and future selling price. Despite the same, the investors are involved in
constant review of the pricing history in the past. Moreover, researchers namely, Carlin
Longstaff and Matoba (2014) indicated that the equity premium is elaborated in terms of risk
premium for heterogeneous beliefs and opinion differences. For such reasons, it is deemed that
the investors must be compensated for dealing with the trading risk along with the risks because
of adverse selection at the time disagreement takes place. In contrast, Guerard Jr, Markowit zand
Xu (2015) indicated that production of stock market index is a vital task which has attained an
increased attention in the financial markets all over the world particularly in UK. Moreover,
Hribar and Yang (2016) research conducted by also signified that no stock should be purchased
in case the priced earnings ratio increased 1.5 times the P/E multiple of the market.

3FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
Hribar and Yang (2016) also indicated that there is an impact of individual value ratios
on the cross section of stock returns. In addition, for stock prices forecasting it is also revealed in
the literature of these researchers that as per the prediction of stock market indices, the
practitioners and risk managers are capable to realise whether their portfolio will decline in the
upcoming years and for this reason they might focus on selling it before turns out to be
depreciated. Guerard Jr, Markowitz and Xu (2015) also revealed in their research that forecasting
stock prices depends on certain factors like economic, political, natural factors and a few more.
These researchers also signified that the predicted returns along with the risk predictions were
used as vital inputs for a mean-variance-optimizer. It has also been observed that the efficiency
of the earnings forecasts revisions in developing stock-based portfolios are important in order to
attain the ability to generate high returns from investing stocks in the international markets.
Research methodology:
Proposed data source:
Data is considered as one of the crucial requirements so that the research success could
be certified and thus, effective data collection is dependent on the study nature and the target
results to be achieved. Data consist of both primary data and secondary data. Secondary sources
are mainly used for accumulating secondary data and these sources constitute of journals, books
and websites for gaining an insight of the past depiction and speculative conditions. With the
help of secondary data, it will become easy for the researcher to assess the research issues based
on the present trends. Along with this, secondary data are always preferred more than primary
data due to their ready availability from the free and online sources.

4FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
The researcher will use various sources for gathering data of the UK stock market. More
precisely, the research will focus on FTSE 250 index. The sources that will be used for the
research include Yahoo Finance and Bloomberg. Along with this, the researcher will use other
sources like research papers in the past, articles and magazines publishing information about the
UK stock market. Moreover, the section of literature review will be developed in such a manner
that it will contain a list of empirical researches conducted previously for linking the research
results with the objectives of the research.
Proposed data sample:
Sampling could be described as the technique where certain organisations belonging to
various industries will be chosen from an entire stock index. With the help of sampling, it will
become easy for the researcher in selecting the secondary data for combining necessary
information that will resemble the research objectives. For this particular research, the researcher
will use non-probability sampling, which is a technique where the samples are gathered in a
process where all items are not provided with equal chances from the population to be selected.
As the researcher will have limited timeframe and budget for carrying out the overall
research, it will not be possible to sample the entire population randomly. This mandates the
need to use another sampling technique and therefore, non-probability sampling technique will
be considered for the research. Moreover, as this research will be based only on secondary data
analysis, the subjects in the non-probability sample will be chosen based on the accessibility of
the stock information. However, it is noteworthy to mention that non-probability sampling
method is that an unknown portion of the overall population will not be sampled. This clearly
implies that the chosen sample will not depict the entire population correctly. Hence, the

5FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
researcher will not be able to use the research outcomes in generalisations associated with the
entire population.
In this research, 10 stocks belonging to different industries will be chosen from the FTSE
250 index and thus, convenience sampling will be deemed fit for the research. By using this
sampling technique, the stocks will be selected, as they will be accessible to the researcher.
Moreover, the stocks will be chosen simply, since they can be recruited easily. Thus, this
technique is taken into account as the cheapest, easiest and lower time consumption technique
for collecting samples.
Timeframe of the research:
Task Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9
Choice of
research topic and
justifying the
same
Development of
literature review
Choosing relevant
research strategies
Accumulating
data
Analysing and
interpreting data

6FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
Assessing the
final results
Conclusions and
recommendations
Submitting draft
of the research
Printing and final
submission
Table 1: Proposed timetable of the research
(Source: As created by author)

7FORECASTING STOCK PRICES IN INTERNATIONAL MARKETS
References:
Carlin, B.I., Longstaff, F.A. and Matoba, K., 2014. Disagreement and asset prices. Journal of
Financial Economics, 114(2), pp.226-238.
Guerard Jr, J.B., Markowitz, H. and Xu, G., 2015. Earnings forecasting in a global stock
selection model and efficient portfolio construction and management. International Journal of
Forecasting, 31(2), pp.550-560.
Hribar, P. and Yang, H., 2016. CEO overconfidence and management forecasting. Contemporary
Accounting Research, 33(1), pp.204-227.