Stock Price Trends
Stock price trends estimated using linear regression.
Summary
Key facts
- The primary trend is increasing.
- The growth rate of the primary trend is 0.73% per annum.
- KO price at the close of February 20, 2025 was $70.04 and was higher than the top border of the primary price channel by $7.38 (11.78%).
- The secondary trend is increasing.
- The growth rate of the secondary trend is 28.04% per annum.
- KO price at the close of February 20, 2025 was lower than the bottom border of the secondary price channel by $0.88 (1.25%). This indicates a possible reversal in the secondary trend direction.
Linear Regression Model
Model equation:
Yi = α + β × Xi + εi
Top border of price channel:
Exp(Yi) = Exp(a + b × Xi + 2 × s)
Bottom border of price channel:
Exp(Yi) = Exp(a + b × Xi – 2 × s)
where:
i - observation number
Yi - natural logarithm of KO price
Xi - time index, 1 day interval
σ - standard deviation of εi
a - estimator of α
b - estimator of β
s - estimator of σ
Exp() - calculates the exponent of e
Primary Trend
Start date: December 13, 2021
End date: April 24, 2024
a = 4.0235
b = 0.0000
s = 0.0389
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0000) – 1
= 0.73%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0389) – 1
= 16.82%
December 13, 2021 calculations
Top border of price channel:
Exp(Y457)
= Exp(a + b × X457 + 2 × s)
= Exp(a + b × 661 + 2 × s)
= Exp(4.0235 + 0.0000 × 661 + 2 × 0.0389)
= Exp(4.1144)
= $61.22
Bottom border of price channel:
Exp(Y457)
= Exp(a + b × X457 – 2 × s)
= Exp(a + b × 661 – 2 × s)
= Exp(4.0235 + 0.0000 × 661 – 2 × 0.0389)
= Exp(3.9589)
= $52.40
April 24, 2024 calculations
Top border of price channel:
Exp(Y1,050)
= Exp(a + b × X1,050 + 2 × s)
= Exp(a + b × 1,524 + 2 × s)
= Exp(4.0235 + 0.0000 × 1,524 + 2 × 0.0389)
= Exp(4.1316)
= $62.28
Bottom border of price channel:
Exp(Y1,050)
= Exp(a + b × X1,050 – 2 × s)
= Exp(a + b × 1,524 – 2 × s)
= Exp(4.0235 + 0.0000 × 1,524 – 2 × 0.0389)
= Exp(3.9762)
= $53.31
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 0.73% per annum.
- KO price at the close of February 20, 2025 was $70.04 and was higher than the top border of the primary price channel by $7.38 (11.78%).
Secondary Trend
Start date: August 31, 2023
End date: October 24, 2024
a = 3.0858
b = 0.0007
s = 0.0304
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0007) – 1
= 28.04%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0304) – 1
= 12.94%
August 31, 2023 calculations
Top border of price channel:
Exp(Y888)
= Exp(a + b × X888 + 2 × s)
= Exp(a + b × 1,287 + 2 × s)
= Exp(3.0858 + 0.0007 × 1,287 + 2 × 0.0304)
= Exp(4.0183)
= $55.61
Bottom border of price channel:
Exp(Y888)
= Exp(a + b × X888 – 2 × s)
= Exp(a + b × 1,287 – 2 × s)
= Exp(3.0858 + 0.0007 × 1,287 – 2 × 0.0304)
= Exp(3.8966)
= $49.23
October 24, 2024 calculations
Top border of price channel:
Exp(Y1,177)
= Exp(a + b × X1,177 + 2 × s)
= Exp(a + b × 1,707 + 2 × s)
= Exp(3.0858 + 0.0007 × 1,707 + 2 × 0.0304)
= Exp(4.3027)
= $73.90
Bottom border of price channel:
Exp(Y1,177)
= Exp(a + b × X1,177 – 2 × s)
= Exp(a + b × 1,707 – 2 × s)
= Exp(3.0858 + 0.0007 × 1,707 – 2 × 0.0304)
= Exp(4.1810)
= $65.43
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 28.04% per annum.
- KO price at the close of February 20, 2025 was lower than the bottom border of the secondary price channel by $0.88 (1.25%). This indicates a possible reversal in the secondary trend direction.
- Discover a new approach to trend analysis.
- Check the power of mathematical statistics.
- Price channels have never been so accurately estimated.
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