Analysis of Average and Standard Deviation

An average is a single value that is meant to typify a list of values. If all the numbers in the list are the same, then this number should be used. If the numbers are not the same, an easy way to get a representative value from a list is to randomly pick any number from the list. (Taken from www.wikipedia.com ) We can see progress of fluctuation in stock price of BNI within a year from January 2nd, 2010 up to October 29th, 2010 by seeing the average stock return with 0.00353 which means that at least the investor whom holds the stock of this company will gain 0.00353 or 0,353% profit per day. Average in return investment of 0,003102 can also mean that the change of price from one day to the next day is only in a light change.
Even though that there are some special days where the change is happening in a very high portion or very low portion, but likely it happened because of special occasion by an event related to financial or economic life which will be explained later on the IHSG situations within a year.
In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. The standard deviation or return investment for the Bank Negara Indonesia, Tbk. as 0.020656 which means that the differences between the expected return and the actual return is 2% so that the investors whom are about to buy the stock of this company can predict at high percentage of correctness of the upcoming price in the coming days.
For the market return, average value of 0.001787 means that the investor whom is hoping to gain some profits from the market return will at least receive 0.1787% profit from the market price. Some major increase or decrease happened as the responses to the situational condition that was happening in the BEJ at the year of 2010. We can see the situation in the BEJ later on the IHSG situations within a year.
For the standard deviation of market return, the calculation result for 0.012901 or 1.2901%. So it means that the difference between the investors’ expected return and actual return from the market (IHSG) is quite small since it’s around than 1% but we have to note down that some fluctuations, that happened to make a highest price in the IHSG or the lowest price, were due to the occasional situations that happen within a year.
Some special events are influencing the fluctuation in the market and also stock price of the company. The upcoming discussion will be talking about what has been happening in the IHSG along the year of 2010.