Asian Paints needs a reversal from blue line, nahi to iski blue film ban jayegi......
More from Professor
Bringing Data Science to Nifty Analysis. A small 🧵
As per Normal Distribution 68% of the time movement is with 1% SD Limits.
For 95% pf the times movement is within 2% SD limits.
And its only 0.3% of the times that movement exceeds 3 SD.
Since 95% covers a lot of ground that's why 2SD is considered to be a a safe range for most events.
The farther we move from the average, chances of occurrence go down. This is what Taleb sahab calls Tail risk, because it lies in the tail of the standard distribution curve.
Normal distribution occurs everywhere. See this
Bollinger Band, which is a very popular indicator has a setting of 2SD. Because its expected that 95% of the time moves will be confined to 2SD limits.
When we say that price is at upper/lower Bollinger band, we are saying that it has reached 2 SD limits and likely to reverse.
Now coming to current scenario, open Nifty daily chart and apply two bollinger Bands on it.
First with default setting and in second change settings to 3 standard deviation.
Crossing 3 SD boundary means that Nifty is now in very rare territory where it has been only 0.3%
As per Normal Distribution 68% of the time movement is with 1% SD Limits.
For 95% pf the times movement is within 2% SD limits.
And its only 0.3% of the times that movement exceeds 3 SD.
Since 95% covers a lot of ground that's why 2SD is considered to be a a safe range for most events.
The farther we move from the average, chances of occurrence go down. This is what Taleb sahab calls Tail risk, because it lies in the tail of the standard distribution curve.
Normal distribution occurs everywhere. See this
The Galton Machine shows order from randomness. Each ball bounces left or right at random, 12 times, but together where they fall can be predicted - the normal distribution. This one made by: https://t.co/oI9wOGq7nG pic.twitter.com/VQtVu66OSE
— Tom Stafford (@tomstafford) April 19, 2018
Bollinger Band, which is a very popular indicator has a setting of 2SD. Because its expected that 95% of the time moves will be confined to 2SD limits.
When we say that price is at upper/lower Bollinger band, we are saying that it has reached 2 SD limits and likely to reverse.
Now coming to current scenario, open Nifty daily chart and apply two bollinger Bands on it.
First with default setting and in second change settings to 3 standard deviation.
Crossing 3 SD boundary means that Nifty is now in very rare territory where it has been only 0.3%
More from Asianpaints
As rightly pointed out by experts, Asian Paints' dominance in the Paints Industry is unshakable. Even the entry of a formidable rival, the specter of a lock-down & alleged nose-bleed valuations of 88x has made no difference to the megabagger. The stock is up 83% on a YoY basis. https://t.co/OFnFAbnQGA
Asian Paints vs. Grasim: Paints is not a very easy industry at all. It is a low-capex consumer business. Asian Paints has built its business over last 35-40 years. The Birlas are not in any consumer businesses. So it is going to be tough for Grasim https://t.co/CqkmFnsaiT pic.twitter.com/iK8ZcvYxpJ
— RJ Stocks (@RakJhun) January 25, 2021
