How to solve for log returns

ChinaStock.mat consists of the weekly close price of four Chinese companies (i.e. Tencent, JD,

Answer 1

[BhaTTa]

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.