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Empirical analysis of asymmetric volatility of shanghai and shenzhen stock markets

  • Jiping Yang*
  • , Runhai Qiao
  • *Corresponding author for this work
  • Beihang University

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

Abstract

The asymmetric response of volatility to positive and negative news has been traditionally modeled with EGARCH and TGARCH models that allow only two possible regimes: positive news or negative news volatility regimes. In this paper, the possibility of intermediate regime is considered and modeled with a smooth-transition GARCH model. This model is more accurate to describe the actual volatility characteristic of stock market. Therefore, it is used to examine the asymmetric volatility of bull market and bear market in Shanghai and Shenzhen stock market in this paper. The empirical analysis shows that positive news may cause higher volatility at the stage of bull market and negative news may cause higher volatility at the stage of bear market. Finally, reasons of asymmetric volatility in terms of investor structure and transaction mechanism have been analyzed.

Original languageEnglish
Title of host publication38th International Conference on Computers and Industrial Engineering 2008
Pages372-378
Number of pages7
StatePublished - 2008
Event38th International Conference on Computers and Industrial Engineering 2008 - Beijing, China
Duration: 31 Oct 20082 Nov 2008

Publication series

Name38th International Conference on Computers and Industrial Engineering 2008
Volume1

Conference

Conference38th International Conference on Computers and Industrial Engineering 2008
Country/TerritoryChina
CityBeijing
Period31/10/082/11/08

Keywords

  • Asymmetric volatility
  • EGARCH model
  • ST-GARCH-M model
  • TGARCH model

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