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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/11426

Title: Selection of Stocks on the Ghana Stock Exchange Using Principal Component Analysis
Authors: Abonongo, John
Oduro, F. T.
Ackora-Prah, Joseph
Keywords: Principal Component Analysis
Stock Selection
Screen Plot
Issue Date: 2016
Publisher: International Journal of Theoretical and Applied Mathematics
Citation: International Journal of Theoretical and Applied Mathematics 2016; 2(2): 100-109 http://www.sciencepublishinggroup.com/j/ijtam doi: 10.11648/j.ijtam.20160202.21
Abstract: A major problem in stock selection is the use of the right procedure(s) in identifying the best stock(s). The principal component analysis was employed as a data reduction technique in selecting stock(s) that characterize each sector on the Ghana Stock Exchange. The results indicated that, among the 9 stocks in the Finance sector, only 3 stocks (CAL, ETI, and GCB) were able to characterize the sector. The Distribution sector had 2 stocks (PBC and TOTAL) among the 4 stocks characterizing the sector. The Food and Beverage sector had only FML characterizing the sector out of the 3 stocks. Also, the information Technology had CLYD characterizing the sector out of the 2 stocks. The Insurance sector had EGL characterizing the sector out of the 2 stocks. The Manufacturing sector had only 2 stocks (PZC and UNIL) characterizing the sector out of the 10 stocks and for the Mining sector, 2 stocks (TLW and AGA) among the 4 stocks were the best. In effect, the 34 stocks considered from the Ghana Stock Exchange were reduced to 12 stocks (CAL, ETI, GCB, PBC, TOTAL, FML, CLYD, EGL, PZC, UNIL, TLW and AGA). The results also indicated that the selected stocks were able to explain much of the variance in their respective sectors compared to the rest of the stocks in that same sector and thus could be considered for further analysis and probably investment.
Description: An article published in International Journal of Theoretical and Applied Mathematics 2016; 2(2): 100-109 http://www.sciencepublishinggroup.com/j/ijtam, doi: 10.11648/j.ijtam.20160202.21
URI: http://hdl.handle.net/123456789/11426
Appears in Collections:College of Science

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