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Finance GlossaryQuantitative Analysis
Quantitative Analysis
Definition of Quantitative Analysis
Quantitative analysis (QA) is the application of mathematical and statistical modeling, measurement, and research to understand and predict behavior in the financial markets. Quantitative analysts use complex mathematical models and algorithms to analyse trading opportunities, manage risk, and execute trades using large amounts of historical data and computational power, rather than qualitative factors such as management experience and company reputation.
Related Terms
Dividend Stocks
Dividend stocks are shares of companies that redistribute their profits to shareholders in the form of dividends. Such companies are typically industry or sector leaders with stellar reputations and track records.
How much dividend a company offers can be calculated with the dividend yield ratio or dividend per share.
Investors prefer to buy dividend stocks because they can either reinvest the dividends to buy more shares or earn passive income. Examples of dividend stocks in India include:
How much dividend a company offers can be calculated with the dividend yield ratio or dividend per share.
Investors prefer to buy dividend stocks because they can either reinvest the dividends to buy more shares or earn passive income. Examples of dividend stocks in India include:
- Coal India
- Indian Oil Corporation (IOC)
- ONGC
- SAIL
- Tata Steel
Negative Working Capital
Negative Working Capital refers to a situation where a company’s short-term assets are lower than its short-term liabilities. This implies the business is using supplier credit or advance payments to run its operations. Although it may suggest cash pressure, in certain business models, it can reflect operational efficiency.
Basing
Basing happens when a security trades sideways after prolonged periods of falling prices.
As a result, the security forms a “base” or flat pattern which means there is little to no upward or downward movement and a decline in volatility.
This may go on for a relatively long time but is crucial as basing is an indicator of any meaningful reversal that may happen.
As a result, the security forms a “base” or flat pattern which means there is little to no upward or downward movement and a decline in volatility.
This may go on for a relatively long time but is crucial as basing is an indicator of any meaningful reversal that may happen.
Bounce Trading
Bounce trading refers to buying a position in security when its price falls to a particular support level with the anticipation that it will “bounce” back to a certain price level. Technical analysis is the bedrock of bounce trading but various patterns and strategies can be used to achieve the desired goal.
Micro Cap Stocks
Micro Cap Stocks are shares of very small companies with a relatively low market capitalisation, typically below ₹500 crore. These stocks can offer high growth potential but also come with higher risk, lower liquidity, and greater price volatility compared to larger, well-established companies.
Equity Market
The Equity Market is a place where shares are traded, money is raised, and stock is offered to investors. That's why it is divided into two categories:
- Primary Market: An equity market where shares are offered to investors for the first time through IPOs while fundraising also happens through private placements.
- Secondary Market: An equity market where shares, bonds, futures, options, more are traded
The primary market is typically over the counter but may be regulated in the case of exchange traded IPOs. The secondary market is often well-regulated as most securities listed are exchange traded.
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