Fuzzy logic in the analysis of stock prices: Evidence from Dhaka Stock Exchange

Abstract

This paper gives an investor the idea to classify the calculated beta of a volatile stock and take decision based on values between 0 and 1. The slope or beta if compared to market index gives the information of how responsive invested stock is in terms of market risk. This paper has also used the fuzzy logic to present the volatility of stock prices of the companies of Dhaka stock exchange as it presents value on membership function which takes all the intermediate values between 0 and 1. This paper (i) proposes the calculation of beta in excel using the historical data of 236 companies of DSE taking daily return of 2013-2017 years,(ii) uses MATLAB R2007b for calculation and graphical presentation on the membership function of fuzzy set. The analysis revealed a decision making scenario for those investors in stock market who invest watching the price-movements.