The Development Of Safety Prices Is Governed Past Times A Physicomathematical Police

From Physics arXiv:

Wally Tzara

(Submitted on 1 Jul 2018)

Since Bachelier's thesis inwards 1900, when mathematical finance began, attempts at agreement the nature of stock marketplace prices together with at predicting them induce got non succeeded. Statistical models induce got exclusively constitute tike regularities together with anomalies. Other approaches induce got failed or are illusory. To this day, physicists together with mathematicians working inwards economic scheme take in that the development of safety prices is largely random, and, thus, non predictable. We present that non exclusively is the development of safety prices non random exactly it is semi-deterministic and, to a greater extent than remarkably, governed past times a physical law. 

The constabulary takes the shape of a physicomathematical theory centered some a purely mathematical role (not a model together with unrelated to statistical methods). The function, which tin dismiss hold upward described equally an "isodense" network of "moving" regression curves of an lodge greater than or equal to 1, tin dismiss hold upward conveniently represented graphically. The graphical representation, called a "topological network", reveals the beingness of novel mathematical objects, which emerge spontaneously (they are non mathematically drawn). 

What is remarkable is that these objects, called "characteristic figures", mainly "cords", induce got the unique belongings of attracting together with repelling the price, together with so that the cost bounces from i cord to another. The direct effect is that prices are driven past times these cords inwards a semi-deterministic mode (leaning towards deterministic). We tin dismiss enjoin that nosotros right away empathize the argue behind cost movements together with tin dismiss predict stock prices both qualitatively together with quantitatively. Note that fourth dimension serial information (not express to financial) is input straight into the role without whatsoever fitting. The role is universal (it is a i fits all function) and, thank y'all to its extreme sensitivity, reveals the hidden lodge acquaint inwards fourth dimension serial information that other methods induce got never uncovered.

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