COVID-19 and equity trading decisions: A control chart analysis

Sadaf Noreen and Dr. Shahnawaz Saqib

Abstract

This article aims to analyze the effect of COVID-19 on stock trading decisions by using a control chart (CC). The study is focused on all the opening prices and average prices of the KSE-30 stock of the top thirty firms. ARIMA (p, d, q) modelling is applied to overcome the autocorrelation (AC) problem. Therefore, two separate stock market sessions were added to research the potential of predictive CC to ensure success. The first short-term cycle runs between January 1 2019 and December 31 2019, and the second short-term cycle runs between January 1 2020 and November 31 2020. As a result, the overall benefit figure measured using the opening price is 30 percent in 2019, 10 percent in 2020, the average price used in 2019 and 2020 is 60 percent, and the average price used in 2020 is 40 percent. This can be viewed as being very high. Portfolio profit based on the opening price is determined by the residual-based (RB) EWMA CC; the results show that the RB EWMA CC achieves the highest average price.
Keywords: KSE-30, Stock Trading, Statistical Process CC