Finance: What is Characteristic Line?

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

00:22

it never mind well these things are points relating the

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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

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is very closely related to the performance of the overall

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market when the market goes up While generally speaking ko

00:47

goes up as well had the line slope the opposite

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direction because the data looked like this than ko would

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be A negatively correlated line with the performance of the

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market in its characteristic would be the opposite direction Well

01:02

the key idea is that lines through bunches of data

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points Those things give character or at least a characteristic

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

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

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

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toy thing Yeah line basically is a summary of all

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

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leaves of these graphs is a big part of what

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chartist style invest or traders All do So if you

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like dots and plots and lines and did a whole

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lot of light bright when you were a kid well

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

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some experience in the mortuary business well you might be

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