Robust Methods of Assessing Fidelity Bank Share Price Movements in Nigeria Stock Market
Abstract
Markov chain is a viable tool for studying the share price formation; since each finite state communicates for proper management decisions in Fidelity bank. Therefore, this paper studied stochastic analysis of Markov chain and PCA in the closing share price data of Fidelity (2016-2022) in Nigeria Stock Exchange. The share prices were transformed into 3-steps transition probability matrix solution to cover this number of years. The future share prices changes were known. The criteria of obtaining four share prices which formed 2x2 matrices were given and analytical solution of principal component were considered for future stock price changes. From the solution matrix of stochastic analysis, showed that Fidelity bank, PLC has the best probability of price increasing in the near future: 10%, best probability of reducing in future by 23% and best probability of no-change in the near future by 22% which is a tool for proper decision making in the day-to-day management of the bank; which shows it is profit making organization and are hopeful for future investment plans both short or long term respectively.
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