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ECON940 Statistics for Decision Making

Assume you work as a stock market analyst, to provide recommendations to your clients about stock investment. How would you go about making a reasonable choice among many stocks available? The objective of your report is to provide general guidelines for your clients to select a group of stocks, based on statistics evidence on different stock characteristics.

The data file “Stock returns” contains information of 6 variables from a sample of 1,469 stocks from 2016 to 2020. It is noted that some stock return information is missing from this data file. The variables and definitions are summarized in the following table:

Assignment tasks:

1. Visually present data and calculate descriptive statistics for the annual stock returns based on stock owner types. Comments on the location, shape and variability of these distributions.

2. Visually present data and calculate descriptive statistics for the annual stock returns based on stock industries. Comments on the location, shape and variability of these distributions.

3. Visually present data and calculate descriptive statistics for the annual stock returns based on years. Comments on the location, shape and variability of these distributions.

4. It is claimed that annual returns of stocks owned by families are higher than annual returns of stocks owned by the government. Test this claim at 5% significance level (95% confidence level).

5. It is claimed that annual returns of stocks from Service industry is higher than the annual returns of stocks from Mining industry. Test this claim at 5% significance level (95% confidence level).

6. How did stock perform over this 5-year period? Using 5% significance level (95% confidence level).

7. In 2020, the COVID-19 has affected the international travelling. So it is claimed that the annual returns of stocks from airline industry were lower in 2020, compared with the annual returns in the previous years. Test this claim at 5% significance level (95% confidence level).

Requirement:

1. Please complete a business report, including the following sections: Executive summary, Business problem, Statistical problem, Main analysis, Conclusion/Recommendation.

Executive summary: This section summarizes the purpose of business report, and the key results and recommendation. (Less than 150 words)

Business problem: This section gives the background of this business report, and summarizes which problems will be examined. (Less than 150 words)

Statistical problem: This section gives the information of what statistical technique will be used in the analysis, and what statistical information will be provided. (Less than 150 words)

Main analysis: This section should include 7 subsections (using sub-headings), covering 7 assignment tasks discussed above.

Conclusion/Recommendation: This section summarizes the key findings that are relevant to your clients, and gives out direct recommendations. (Less than 150 words)

2. Use 5% level of significance (95% confidence level) in your analyses for all questions of hypothesis testing.

3. Excel outputs should be incorporated into your report.

4. Using histogram to visualize the data.

5. When calculating and reporting the descriptive statistics, coefficient of variations (CV) should be also calculated and reported.

6. A table of content should be present (after Executive summary, and before the Business problem)

7. Word limit for each section will be strictly imposed.