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An empirical heterogeneous trading strategy model in the Shanghai stock market of China

  • Yanhong Wang*
  • , Shancun Liu
  • *Corresponding author for this work
  • Beihang University

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In this paper, we study an order-driven stock market where agents have heterogeneous estimates of the fundamental value of the risky asset. The agents are budget-constrained. Their value-based trading strategy in which buys or sells depend on whether the price of the asset is below or above its risk-adjusted fundamental value. We assume that investors' optimal demand for the risky asset depends on wealth, as a result of CRRA utility. We adopt PE and turnover to study fundamentalism and characteristics on cross-sectional earnings impact. The empirical results show that: fundamentalist trading strategy and chartist trading strategy for different combinations have different effects. In China, fat tails and a leptokurtic shape of the return distribution is the fundamentalist trading strategy and chartist trading strategy of the common effects.

Original languageEnglish
Title of host publication2011 International Conference on Management Science and Industrial Engineering, MSIE 2011
Pages227-230
Number of pages4
DOIs
StatePublished - 2011
Event2011 International Conference on Management Science and Industrial Engineering, MSIE 2011 - Harbin, China
Duration: 8 Jan 201111 Jan 2011

Publication series

Name2011 International Conference on Management Science and Industrial Engineering, MSIE 2011

Conference

Conference2011 International Conference on Management Science and Industrial Engineering, MSIE 2011
Country/TerritoryChina
CityHarbin
Period8/01/1111/01/11

Keywords

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  • Formatting
  • Insert
  • Style
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