How to solve for log returns

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Martin Njagi
Martin Njagi il 15 Apr 2022
Risposto: BhaTTa il 19 Mar 2025
ChinaStock.mat consists of the weekly close price of four Chinese companies (i.e. Tencent, JD,

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BhaTTa
BhaTTa il 19 Mar 2025
Hey @Martin Njagi, To calculate the log returns from stock prices, you can follow these steps. Log returns are often preferred in financial analysis because they are time-additive and can be more stable than simple returns.Steps to Calculate Log Returns
  1. Load the Data: First, load your data, which consists of the weekly closing prices of the stocks.
  2. Calculate Log Returns: Use the formula for log returns:
Log Return = log(P_t / P_(t-1))
where ( P_t ) is the price at time ( t ) and ( P_{t-1} ) is the price at the previous time period.
3. Store the Results: Store the log returns in a new matrix or table for further analysis.

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