The Return Prediction of the Coca - Cola Stock in Nigeria Through Stochastic Analysis

Nnoka Love Cherukei and Nlerum Promise Anebo
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Nnoka Love Cherukei: Department of Mathematics/ Statistics, Captain Elechi Amadi Polytechnic, Port Harcourt, Nigeria.
Nlerum Promise Anebo: Department of Computer Science and Informatics, Federal University Otuoke, Bayelsa State, Nigeria.

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Abstract: This Paper emphasizes on the stock market price' evaluation of Coca-Cola Company with a view to providing useful financial guidance to investors and investments. A Seven-year Stock Price Data was collected from Coca-Cola Historical Annual Stock Price Data between the periods 2016 -2022. A three - step transition probability matrix was generated from the collected data which was originally in a ‘Count Matrix' form. An n x 1 column vector of ones was used to generate the mean vector by multiplying with the transpose of the ‘count matrix' and dividing the result by the number of rows of the ‘count matrix'. The Percentage Rate of Return (PROR) for each priced year was calculated to aid the Company and Investors determine the effectiveness of their investments. The rate of return is a metric that informs the business owners and investors of the state of their businesses; whether it is worth venturing or not by exposing their profit capacities. This work also calculated the anticipated price movements for the Company to help them in terms of decision making in the nearest future. The transition probability matrix predicted the future stock prices of the company while considering the first rows thus the company would have a 0.3255 probability of reducing its price,0.3423 probability of increasing its price and lastly a 0.3322 probability of stabilizing or normalizing its profit.

Date: 2024-09-04
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Published in Asian Journal of Economics, Finance and Management , 2024, 6 (1), pp.305-312

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05078602

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