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Finance: What is Characteristic Line? 39 Views


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What is Characteristic Line? Technical analysts’ stock in trade are their charts, which crunch the numerical data from past trading dates to assess the market’s sentiment towards a particular tradeable asset. The characteristic line is the measurement of the asset’s historical excess return relative to return under zero risk conditions.

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Transcript

00:00

Finance allah shmoop what is characteristic line thie characteristic line

00:08

is a quote fitted unquote line through a bunch of

00:12

data points that reflects the character of the data itself

00:16

Like all these dots here they actually have a character

00:19

like pathos and humanity and you see it getting feel

00:22

it never mind well these things are points relating the

00:25

returns from coca cola stock versus the s and p

00:29

five hundred over some period of time Well that highly

00:32

similarly fitted line shows that the performance of k o

00:37

it's the ticker for coke if you live on mars

00:40

is very closely related to the performance of the overall

00:43

market when the market goes up While generally speaking ko

00:47

goes up as well had the line slope the opposite

00:51

direction because the data looked like this than ko would

00:55

be A negatively correlated line with the performance of the

00:58

market in its characteristic would be the opposite direction Well

01:02

the key idea is that lines through bunches of data

01:05

points Those things give character or at least a characteristic

01:09

explaining the direction of a given trend whether it's a

01:12

stock price the popularity of a new children's toy or

01:16

the ebola infection rate way less fun than that children's

01:21

toy thing Yeah line basically is a summary of all

01:24

the dots That's what it is Well reading the tea

01:27

leaves of these graphs is a big part of what

01:29

chartist style invest or traders All do So if you

01:33

like dots and plots and lines and did a whole

01:37

lot of light bright when you were a kid well

01:39

then maybe this one's for you And if you've got

01:41

some experience in the mortuary business well you might be

01:44

able to come up with some kind of crossover gig 00:01:49.619 --> [endTime] Ooh

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