Section 2: Daily Returns
Explore how to calculate daily stock returns using Python's pandas pct_change function and visualize them with Matplotlib. Understand daily return fluctuations through KDE plots to identify stable stocks like Systems Ltd. This lesson equips you to analyze price trends and assess stock stability using real financial data.
We'll cover the following...
Daily returns
The price of stock changes on a daily basis. Daily return calculations tell us how much the current day stock value is different from the previous day stock value. A positive change indicates a rise in the value of the stock while a negative change indicates a fall in the value of the stock. A stock with minimal positive or negative change is considered to be a stable and good stock.
As seen in the previous lesson, only Systems Ltd and Avanceon stocks provide promising results for the year 2018. So, daily returns of Systems Ltd will be calculated and visualized in this lesson as this company had a higher value compared to Avanceon. Results for any company can be obtained by simply changing the name for the company file as discussed before.
Calculating daily returns
We don’t need to figure out the formula or steps for calculating the daily returns ...