4328: Artificial Neural Networks in Accounting
B.Sc. Accounting (Special) Degree
Year IV Semester II
An Analysis of the Performance of Weighted Moving Average Technique
for Stock Market Forecasting
By
Name CPM No: MC No:
K.M.T.N.Muhandiram 7418 61374
February, 2014
Department of Accounting
Faculty of Management Studies and Commerce
University of Sri Jayewardenepura
Nugegoda.
1
TABLE OF CONTENTS
1. Abstract ............................................................................................................... 02-02
2. Introduction ......................................................................................................... 03-05
3. Literature review ................................................................................................. 06-07
4. Research Design.................................................................................................. 08-11
5. Data Analysis ...................................................................................................... 12-59
6. Conclusion .......................................................................................................... 60-60
7. Recommendations ............................................................................................... 61-61
8. References……………………………………………………………………...62-65
2
Abstract
In this paper, I demonstrated a method to forecast the quarterly stock price available in
Colombo Stock Exchange using weighted moving average technique by sub dividing the all
listed quoted companies into twelve industries. Stock price prediction is one of the emerging
fields in neural network forecasting area. Other techniques such as Index Terms—Neural
network, Financial, Stock movement, Modeling, Simulation, State of the art, are also
mentioned as weighted moving average method is not the only tools used to predict stock
movements.
Stock prediction with data mining techniques is one of the most important issues in finance
being investigated by researchers across the globe. Data mining techniques can be used
extensively in the financial markets to help investors make qualitative decision. One of the
techniques is artificial neural network (ANN). However, in the application of ANN for
predicting the financial market the use of technical analysis variables for stock prediction is
predominant but there are some difficulties encountered when modeling such neural
networks. Stock market prediction is very difficult since it depends on several known and
unknown factors while weighted moving average technique is a popular technique for the
stock market forecasting.
In this paper, weighted moving average technique and statistical techniques are employed to
model and forecast the quarterly stock market prices and then the results of these models are
grafted and tabulated. The forecasting ability of this model is accessed using MAE, MPE,
MAPE, MSE and RMSE. The results show that weighted moving average method can predict
the stock market prices very well. Statistical technique though well built and they can be used
as a better alternative technique for forecasting the quarterly stock market prices which guide
for traders and investors in making qualitative decisions.
Keywords - Quarterly share price forecasting, ANN, Weighted moving average technique,
Mean Square Error, Mean Absolute Error, Root Mean Squared Error, Decision Support.
3
Chapter 01 Introduction
Stock movement prediction has been at focus for years since it can yield significant profits.
Fundamental and technical analysis was the weighted moving average method used to
forecast stock prices. A new method appeared more recently, the technological analysis,
where computers are used as a tool to predict the stock movements. Technological analysis
tries to model and simulate as accurately as possible the behavior of the stock exchanges, by
different techniques which I will discuss in the following. The first market hypothesis is that
stock prices follow a random walk. However, many researchers and economists were able to
extract rules for predicting the stock prices evolution, showing that some basic observations
significantly increase the quality of their predictions.
Stock price prediction is one of the most important topics in finance and business. However,
the stock market domain is dynamic and unpredictable. Several research efforts have been
carried out to predict the market in order to make profit using different techniques ranging
from statistical analysis, technical analysis, to fundamental analysis among others, with
different results. These techniques cannot provide deeper analysis that is required and
therefore not effective in predicting stock market prices.
Weighted moving average technique is one of data mining and forecasting techniques that is
gaining increasing acceptance in the business area due to its ability to learn and detect
relationship among nonlinear variables. Also, it allows deeper analysis of large set of data
especially those that have the tendency to fluctuate within a short of period of time.
The elasticity and adaptability advantages of the weighted moving average technique have
attracted the interest of many other researchers. Apart from business and banking domain,
other interested disciplines where weighted moving average technique is being engaged
including the electrical engineering, robotics and computer engineering, oil and medical
industries. Since the last decade, the weighted moving average technique has been used
extensively in the fields of business, finance and economics for several purposes like time
series forecasting and performance measurement.
Financial forecasting is of considerable practical interest and due to weighted moving average
technique’s ability to mine valuable information from a mass history of data; its applications
to financial forecasting have been very popular over the last few years. However, the focus of
this paper is to improve the accuracy of stock price prediction by using the weighted moving
average approach that combines the variables of technical and fundamental analysis for the
creation of weighted moving average technique predictive model for stock price prediction.
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The technical analysis variables are the core stock market indices (current stock price,
opening price, closing price, volume, highest price and lowest price etc.) while the
fundamental analysis variables are company performance indices (price per annual earning,
rumor/news, book value and financial status etc.).
From the beginning of time it has been man’s common goal to make his life easier. The
prevailing notion in society is that wealth brings comfort and luxury, so it is not surprising
that there has been so much work done on ways to predict the markets. Therefore forecasting
stock price or financial markets has been one of the biggest challenges to the artificial
intelligent community. Various technical, fundamental, and statistical indicators have been
proposed and used with varying results. However, none of these techniques or combination of
techniques has been successful enough. The objective of forecasting research has been
largely beyond the capability of traditional artificial intelligence research which has mainly
focused on developing intelligent systems that are supposed to emulate human intelligence.
By its nature the stock market is mostly complex (non-linear) and volatile. With the
development of weighted moving average technique, researchers and investors are hoping
that the market mysteries can be unraveled.
It should be mentioned that, although sometimes the rules or patterns that we are looking for
might not be easily found or the data could be corrupted due to the process or measurement
noise of the system, it is still believed that the inductive learning or data driven methods are
the best way to deal with real world prediction problems.
In the following I will briefly introduce the idea of weighted moving average technique in the
chapter 03 where as the second chapter presents the literature review. In the fourth chapter
the experimental results of the weighted moving average method on a company’s quarterly
share price data will be analyzed using different presentation models. Finally the fifth chapter
concludes the research paper and describing the future works of the study including the
recommendation is in chapter six.
1.2 Problem statement
This research studies how to identify the best industry/s to invest and to identify the best
quoted companies to invest mainly to achieve speculative objective by obtaining capital gain
rather than dividend income using the quarterly share price movement analyzed using
weighted moving average technique over nine years for all listed companies under twelve
industry clusters.
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1.3 Objectives of the study
The key objectives of this research article are to focus on the forecasting the share prices of
each listed quoted companies for the first quarter of the year of 2014, where the sub
objectives are;
1. To investigate the best performed industries to diversify in terms of increasing forecasted
industry average share prices.
2. To identify the best performed companies in selected industries to invest and obtain
capital gain in terms of increasing the forecasted company share prices.
1.4 Significance of the study
Only few researches have been conducted in relating to forecasting the share prices for
quoted listed companies in Colombo Stock Exchange but none of the research conducted
using the weighted moving average technique covering the all of listed companies under the
categories of major twelve industries in Sri Lankan economy. This research will be very
important to the investors who are expecting to invest in stock market and obtain the capital
gain rather than dividend income in the coming first quarter of 2014 and to identify the best
performed companies in the best performed industries in terms of increasing share prices.
1.5 Limitation of the study
This study has been conducted and come to a conclusion subject to the following limitations;
1. Only quoted listed companies operated in Sri Lankan economic context were selected and
all other companies are ignored.
2. Only share prices available in the CSE are considered whereas all other variables which
determined share price of a company were ignored.
3. Only quarterly share prices are considered in average basis.
4. Only weighted moving average method was used to forecast the share prices.
5. Time limitation.
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Chapter 2 Literature review
Investors in stock market primarily traded stocks based on intuition before the advent of
computers. The continuous growth level of investing and trading necessitate a search for
better tools to accurately predict the market in order to increase profits and reduce losses.
Statistics, technical analysis, fundamental analysis, time series analysis, chaos theory and
linear regression are some of the techniques that have been adopted to predict the market
direction (Ravichandran, 2005).
However, none of these techniques has been able to consistently produce correct prediction of
the stock market, and many analysts remain doubtful of the usefulness of many of these
approaches. However, these methods represented a base-level standard which neural
networks must outperform to command relevance in stock market prediction. Although the
concept of artificial neural networks (ANN) has been around for almost half a century, only
in the late 1980s could one ascertain that it gained significant use in scientific and technical
presentations. There are quite a lot of research works on the application of neural networks in
economics and finance, (S.A.Hamid, 2004).
According to E. Avci and H. White published the first significant study on the application of
the neural network models for stock market forecasting. Following White’s study, several
research efforts were carried out to examine the forecasting effectiveness of the neural
network models in stock markets. However, most of researchers have used to follow the
weighted moving average technique to forecast the share prices. Among the earlier studies,
the work in T. Kimoto and K.Kamijo can be mentioned. However, in another contribution,
M. Yoda in 1994 investigated the predictive capacity of the neural network models for the
Tokyo Stock Exchange. In 1992, F.S.Wong, neural network models were used to forecast
various US stock returns. Also, in 1993, L. Kryzanowski neural network models were used to
select the stock from the Canadian companies. In 2007 E. Avci, it was stated that the study of
stock prediction can be broadly divided into two schools of thought. One focuses on
computer experiments in virtual/artificial markets.
This is often the case when researchers model the complex movements in the market
economics H. Matsui, 2005. The other school focuses on stock prediction based on real-life
financial data as exemplified in D. Zhora and T. Yamashita, 2005. According to E.Avci,
different studies examined the stock market forecasting applications of neural network
models from different perspective.
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Some studies considered the effects of modeling preferences on one type of neural network
models. On the other hand, some other studies were devoted to investigating the forecast
performance differences among different neural network models said by S.H. Kim, 1998.
Other than the modeling issues, several studies evaluated the profitability of neural network
models in stock markets. Among these studies, J.T. Yao, 1999 and J.V. Rodriguez, 2005
reported that the technical trading strategy guided by feed forward neural network model was
superior to buy-and-hold strategy. However, previous efforts on stock market prediction have
engaged predominantly the variables of technical analysis. The impact of fundamental
analysis variables has been largely ignored.
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Chapter 3 Research Design
3.1 Background
The Colombo Stock Exchange (CSE) is the main stock exchange in Sri Lanka. It is one of
the most modern exchanges in South Asia, providing a fully automated trading platform. The
vision of the CSE is to contribute to the wealth of the nation by creating value through
securities. The headquarters of the CSE have been located at the World Trade Center
Towers in Colombo since 1995 and it also has branches across the country
in Kandy, Matara, Kurunegala, Jaffna, Negombo and Anuradhapura . As of 26 June 2013,
the Colombo Stock Exchange had 287 listed companies with a combined market
capitalization over 18.3 billion US dollars.
Share trading in Sri Lanka dates back to 1896 when the Colombo Brokers
Association commenced the share trading in limited liability companies which were involved
in opening plantations in Sri Lanka. The establishment of a formal stock exchange took place
in 1985 with the incorporation of the Colombo Stock Exchange (CSE), which took over the
Stock Market from the Colombo Share Brokers Association. It currently has a membership of
15 institutions, all of which are licensed to operate as stockbrokers.
As of 26 June 2013, 287 companies are listed on the CSE, representing twenty business
sectors with a market capitalization of 2.3 trillion rupees (over US$ 18.5 billion), which
corresponds to approximately 1/3 of the Gross Domestic Product of the country.
There are currently two indices in the CSE:
1. The All Share Price Index (ASPI)
2. The S&P Sri Lanka 20 Index (S & P SL 20)
(Milanka Price Index - MPI was abolished after 30/12/2012)
The exchange has pre-open sessions from 09:00 am to 09:30 am and normal trading sessions
from 09:30 am to 02:30 pm on all days of the week except Saturdays, Sundays and holidays
declared by the Exchange in advance. The CSE operates 3 main systems:
1. The Central Depository System (CDS)
2. Automated Trading System (ATS)
(After implementing ATS version-7, The Debt Securities Trading System (DEX) was
abolished since ATS-7 provides a platform for both Debt & Equity). The automation of the
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Exchange commenced in 1991 with the installation of a central depository and an electronic
clearing and settlement system for share transactions. The trading activity was automated
with the installation of the Automated Trading System (ATS) in 1997.
The technology introduced by the Exchange has significantly enhanced the competitiveness
of the CSE and has provided a more efficient and transparent market. The CSE is currently in
the process of introducing a debt securities trading system for trading of fixed income
securities.
As a modern exchange, the CSE now offers state-of-the-art technological infrastructure to
facilitate an "order-driven trading platform" for securities trading - including shares,
corporate debt securities and government debt securities. The CSE was elected as a member
of the World Federation of Exchanges in October 1998 and also was the first Exchange in the
South Asian Region to obtain membership. The CSE is the 52nd
Exchange to have been
elected to membership of the Federation.
1. South Asian Federation of Exchanges SAFE
The CSE became a founder member of the SAFE in January 2000, and is currently the
Chairman of the Association. SAFE consists of 17 Exchanges from India, Pakistan,
Bangladesh, Sri Lanka, Nepal and Bhutan. Its primary objectives are to encourage
cooperation among its members in order to promote the development of their individual
securities markets, to develop an integrated regional stock trading system, and to offer listing
and trading opportunities for securities issued in the region. Companies listed on the CSE
have seen a large increase in foreign investment following the ceasefire agreement signed by
the Sri Lankan Government that brought an end to the 30 year old civil war.
Foreign investment in the stock market is freely permitted except in the case of a few
companies where there are certain restrictions imposed. Investment in shares in Sri Lanka and
repatriation of proceeds take place through Share Investment External Rupee Accounts
(SIERA) opened with licensed commercial banks. Income from investments such as interest,
dividends and profit realized from such investments are not subject to Exchange Control
Regulations by the Sri Lankan Government.
After witnessing mediocre performance throughout the 1990s mainly due to the Sri Lankan
Civil War, the ceasefire agreement signed in 2001 saw unprecedented growth in the both
indices of the CSE. The All Share Price Index, which was hovering around the 500 mark in
August 2001, has surpassed the 2000 mark after that.
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This led CSE to be consistently dubbed as one of the best performing markets in the world.
As of 2005 the CSE had recorded a consistent annual growth of over 30% in the All Share
Price Index (ASPI) for the previous three years. It surpassed that in 2006, with the ASPI
growing by 41.6%, and the MPI growing by 51.4% during the calendar year. CSE recorded
the highest point in history on 26 February 2007. Milanka Price Index (MPI) reached 4,214.8
points on that day.
Buoyed by improved investor confidence due to positive political developments and strong
corporate results the CSE continued to achieve strong growth in 2007, as the ASPI surged
passed the 3,000 mark for the first time in its history on February 13, reaching a record high
for the seventh consecutive day. The CSE has also recorded an average daily turnover of Rs.
776.8 million for 2007.
After the end of the Sri Lankan Civil War on 18 May 2009, CSE indexes increased rapidly
creating new records. Market capitalization at the Colombo Stock Exchange reached record
high on 6th
October 2009 as it reached the Rs. 1 trillion marks for the first time in Sri Lanka’s
history. All Share Price Index (ASPI) broke the record for its previous high by marking
3549.27 points on 11th
January 2010. CSE was the best performing stock exchange in the
world in 2009 as it jumped 125.2 percent during that year.
3.2 Forecasting techniques
Many tools are used to try to model the behavior of the stock movements, and many
researches have been conducted with this goal in mind. However, many of them were done
by financial corporations, who keep them confidential as they are used to guide their financial
investments. Another point to consider is when dealing with researches their correctness. It
has been shown that for many reasons, in financial forecasting using neural networks most of
the search results can’t be used as is, as researchers did not fully investigate the potential of
their solutions. Among all the available techniques, here is the most commonly used WMA.
Weighted Moving Average (WMA) technique forecasts the share prices based on the
weighted moving average of a listed company over a given period of time, since the ability to
give more importance to what happened recently, without losing the impact of the past. For
this share price forecasting, 0.5, 0.3, and 0.2 have been used as the weights for each quarter
starting from the most resent three quarters respectively.
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3.3 Sample
The sample was measured as all listed companies listed in Colombo Stock Exchange under
the twelve industries namely Agriculture, Banking, Beverage, Diversified holding, Finance
and investment, Footwear and textile, Health care, Hotel, Insurance, Manufacturing,
Plantations, and Telecommunication.
3.4 Conceptual Framework
The figure 3.4 drafted below was the study model used to forecast the share prices in twelve
industries and individual companies with in the selected industry separately.
Figure 3.4 – Conceptual Framework
3.5 Data collection
Different sources plan have been used to collect data for this research. Several research
articles related to share price forecasting as well as official web site of Colombo Stock
Exchange were referred to obtain the daily share prices for the listed quoted companies in Sri
Lanka covering twelve industries. The daily share prices of each company were collected
from 1st January 2004 to 31
st December 2013. Then average quarterly share prices were
derived from the daily share prices and forecasted them using the weighted moving average
method.
1. Agriculture
2. Banking
3. Beverage
4. Diversified Holding
5. Finance and Investment
6. Footwear and Textile
7. Health care
8. Hotel
9. Insurance
10. Manufacturing
11. Plantations
12. Telecommunication
Forecasting by
using Weighted
Moving Average
Method. Which Companies
to be selected to
invest?
Which Industry to
be selected to
invest?
12
Chapter 4 Data Analysis
4.1 Agriculture industry
Share prices of agriculture industry were examined and tabulated (Refer table 4.1.1) to
forecasting the share prices for the first quarter of 2014. There were four listed quoted
companies namely Agstar Fertilizers Limited, CIC, Ceylon Tea Brokers Limited, and
Lankem Ceylon were identified and selected to represent the agriculture industry over last ten
years. Quarterly share prices were derived based on the average daily share prices published
in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
agriculture industry average share price was continuously decreasing from the third quarter of
2011 to fourth quarter of 2013. (I.e. Rs. 175.30 to Rs. 51.79) (Refer table 4.1.1). Based on the
weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 48.94 which is below than the latest quarter share price of Rs.
51.79 in the fourth quarter of 2013 (Refer figure 4.1.1 and 4.1.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e 0.28 and mean percentage error was – 0.10 (Refer table 4.1.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, agriculture industry is
one of share price decline industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the agriculture industry. However, it was noted
that the share prices of individual companies as well as the industry as a whole have started to
increase during the period from the first quarter of 2010 to second quarter of 2011 and then
started to decline continuously up to fourth quarter of 2013 and thereafter forecasted that the
share prices of whole industry would further be declined (Refer figure 4.1.1 and 4.1.2).
When further analyzing of agriculture industry, I could noted that Lankem Ceylon Plc has
reported the highest share price Rs. 419.60 in second quarter of 2011(Refer table 4.1.1). At
the end of fourth quarter of 2013, Rs. 130.00 (Refer figure 4.1.1 and 4.1.2) average share
price was reported as the highest company share prices of the agriculture industry. However,
when considering the each company separately in the agriculture industry all four companies’
share prices which ware forecasted for the first quarter of 2014, it was noted that the
forecasted share price going to be further declined which required to be taken the wise
decisions by the investors who are existing and potential before investing the agriculture
industry.
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Table 4.1.1
Agriculture Industry
Year Quarter
Agstar
Fertilizers
Limited CIC
Ceylon
Tea
Brokers
Limited
Lankem
Ceylon
Industry
Average
Quarter
Price (Yt)
Forecasted
Share Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 - 132.00 - 14.50 73.25
Q 2 - 142.00 - 23.25 82.63
Q 3 - 127.00 - 34.50 80.75
Q 4 - 125.00 - 34.00 79.50 79.81 (0.31) 0.31 0% 0% 0.10
Q 1 - 160.00 - 70.00 115.00 80.50 34.50 34.50 30% 30% 1,190.25
Q 2 - 152.75 - 67.50 110.13 97.50 12.63 12.63 11% 11% 159.39
Q 3 - 190.00 - 76.75 133.38 105.46 27.91 27.91 21% 21% 779.11
Q 4 - 150.00 - 38.00 94.00 122.73 (28.73) 28.73 -31% 31% 825.13
Q 1 - 179.00 - 54.00 116.50 109.04 7.46 7.46 6% 6% 55.69
Q 2 - 64.00 - 40.00 52.00 113.13 (61.13) 61.13 -118% 118% 3,736.27
Q 3 - 67.00 - 45.00 56.00 79.75 (23.75) 23.75 -42% 42% 564.06
Q 4 - 98.00 - 39.50 68.75 66.90 1.85 1.85 3% 3% 3.42
Q 1 - 90.00 - 36.75 63.38 61.58 1.80 1.80 3% 3% 3.24
Q 2 - 38.50 - 33.50 36.00 63.51 (27.51) 27.51 -76% 76% 756.94
Q 3 - 39.75 - 32.25 36.00 50.76 (14.76) 14.76 -41% 41% 217.93
Q 4 - 38.75 - 34.50 36.63 41.48 (4.85) 4.85 -13% 13% 23.52
Q 1 - 33.75 - 46.50 40.13 36.31 3.81 3.81 10% 10% 14.54
Q 2 - 33.25 - 40.00 36.63 38.25 (1.63) 1.63 -4% 4% 2.64
Q 3 - 40.00 - 41.25 40.63 37.68 2.95 2.95 7% 7% 8.70
Q 4 - 28.75 - 23.25 26.00 39.33 (13.33) 13.33 -51% 51% 177.56
Q 1 - 31.50 - 28.75 30.13 32.51 (2.39) 2.39 -8% 8% 5.70
Q 2 - 59.00 - 38.50 48.75 30.99 17.76 17.76 36% 36% 315.51
Q 3 - 65.50 - 40.00 52.75 38.61 14.14 14.14 27% 27% 199.87
Q 4 - 63.00 - 45.00 54.00 47.03 6.98 6.98 13% 13% 48.65
Q 1 - 68.00 3.70 65.00 45.57 52.58 (7.01) 7.01 -15% 15% 49.12
Q 2 - 74.00 4.20 119.25 65.82 49.53 16.28 16.28 25% 25% 265.15
Q 3 - 137.50 4.50 210.10 117.37 57.38 59.99 59.99 51% 51% 3,598.60
Q 4 - 140.70 4.60 240.30 128.53 87.54 40.99 40.99 32% 32% 1,680.32
Q 1 - 155.00 4.90 401.50 187.13 112.64 74.49 74.49 40% 40% 5,549.26
Q 2 - 136.30 4.80 419.60 186.90 155.60 31.30 31.30 17% 17% 979.69
Q 3 - 130.00 8.20 325.10 154.43 175.30 (20.86) 20.86 -14% 14% 435.28
Q 4 - 111.50 7.70 260.00 126.40 170.71 (44.31) 44.31 -35% 35% 1,963.67
Q 1 10.20 95.60 5.00 180.00 72.70 146.91 (74.21) 74.21 -102% 102% 5,507.12
Q 2 7.90 84.90 4.90 133.10 57.70 105.16 (47.46) 47.46 -82% 82% 2,252.14
Q 3 7.80 83.50 6.60 205.10 75.75 75.94 (0.19) 0.19 0% 0% 0.04
Q 4 6.20 63.20 5.70 160.70 58.95 69.73 (10.78) 10.78 -18% 18% 116.10
Q 1 5.70 61.00 5.30 144.50 54.13 63.74 (9.62) 9.62 -18% 18% 92.45
Q 2 6.70 66.00 4.20 150.90 56.95 59.90 (2.95) 2.95 -5% 5% 8.69
Q 3 5.90 54.00 3.90 127.20 47.75 56.50 (8.75) 8.75 -18% 18% 76.61
Q 4 4.80 47.00 4.10 130.00 46.48 51.79 (5.31) 5.31 -11% 11% 28.20
2014 Q 1 48.95 (48.95) 48.95 2,396.35
Sum 3,045.43 2,912.73 (103.93) 813.61 -373% 1036% 34,086.96
N 40 38 38 38 37 37 38
Mean Absolute Error 21.41
Mean Percentage Error (0.10)
Mean Absolute Percentage Error 0.28
Mean Squire Error 897.03
Root Mean Squire Error 29.95
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
14
Figure 4.1.1
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Agriculture Industry
Agstar Fertilizers Limited
CIC
Ceylon Tea Brokers Limited
Lankem Ceylon
Industry Average Quarter Price (Yt)
Forecasted Share Price
15
Figure 4.1.2
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Agriculture Industry
Industry AverageQuarter Price (Yt)
Forecasted Share Price
16
4.2 Banking industry
Share prices of banking industry were examined and tabulated (Refer table 4.2.1) to
forecasting the share prices for the first quarter of 2014. There were nine listed quoted
companies namely DFCC, HNB, Merchant Bank, NTB, Pan Asia, Sampath, Sanasa
Development, Seylan Bank, Union Bank were identified and selected to represent the
banking industry over last ten years. Quarterly share prices were derived based on the
average daily share prices published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
banking industry average share price was continuously decreasing from the third quarter of
2010 to fourth quarter of 2013. (i.e. Rs. 235.63 to Rs. 75.41) (Refer table 4.2.1). Based on the
weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 77.36 which is below than the latest quarter share price of Rs.
80.32 in the fourth quarter of 2013 (Refer figure 4.2.1 and 4.2.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e 0.18 and mean percentage error was – 0.03 (Refer table 4.2.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, banking industry is one
of share price decline industry which required taking the prudent decision whether to invest,
hold or divest the investment made in the banking industry. However, it was noted that the
share prices of individual companies as well as the industry as a whole have started to
increase during the period from the first quarter of 2010 to third quarter of 2010 and then
started to decline continuously up to fourth quarter of 2013 and thereafter forecasted that the
share prices of whole industry would further be declined (Refer figure 4.2.1 and 4.2.2).
When further analyzing of banking industry, I could noted that Sampath bank has reported
the highest share price Rs. 517.80 in third quarter of 2010 (Refer table 4.2.1). At the end of
fourth quarter of 2013, Rs. 166.00 (Refer figure 4.2.1 and 4.2.2) average share price was
reported as the highest company share prices of the banking industry. However, when
considering the each company separately in the banking industry all nine companies’ share
prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted
share price going to be further declined except Union bank, Seylan bank, and NTB bank (i.e.
these three companies’ forecasted share price going to be increased.) which required to be
taken the wise decisions by the investors who are existing in the banking industry and
potential investors who are going to invest in the Banking industry.
17
Table 4.2.1
Banking Industry
Year Quarter DFCC HNB
Merchant
Bank NTB Pan Asia Sampath
Sanasa
Develop
ment
Seylan
Bank
Union
Bank
Industry
Average
Quarter
Price (Yt)
Forecasted
Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 221.00 72.00 10.00 24.75 - 85.00 - 46.00 - 76.46
Q 2 239.00 66.25 14.75 22.25 - 86.00 - 39.75 - 78.00
Q 3 228.00 60.00 11.75 22.00 - 87.00 - 34.00 - 73.79
Q 4 206.00 57.00 9.25 18.75 - 62.75 - 31.00 - 64.13 75.59 (11.46) 11.46 -18% 18% 131.39
Q 1 238.50 59.00 30.25 21.75 20.00 76.00 - 34.50 - 68.57 69.80 (1.23) 1.23 -2% 2% 1.51
Q 2 245.00 80.00 32.00 22.25 17.25 84.50 - 37.00 - 74.00 68.28 5.72 5.72 8% 8% 32.70
Q 3 260.00 115.00 32.00 31.00 17.50 106.00 - 54.75 - 88.04 70.40 17.64 17.64 20% 20% 311.14
Q 4 220.00 110.00 14.00 23.50 16.00 90.00 - 36.75 - 72.89 79.93 (7.04) 7.04 -10% 10% 49.55
Q 1 220.25 120.00 18.75 24.00 15.25 85.25 - 37.00 - 74.36 77.66 (3.30) 3.30 -4% 4% 10.89
Q 2 163.00 103.75 14.25 20.00 13.25 80.25 - 33.50 - 61.14 76.65 (15.51) 15.51 -25% 25% 240.58
Q 3 160.75 102.00 15.00 26.00 15.25 93.25 - 40.00 - 64.61 67.46 (2.85) 2.85 -4% 4% 8.12
Q 4 178.25 158.75 15.25 28.00 10.25 107.00 - 33.75 - 75.89 65.52 10.38 10.38 14% 14% 107.64
Q 1 193.00 100.00 15.00 34.00 9.75 107.00 - 33.00 - 70.25 69.56 0.69 0.69 1% 1% 0.48
Q 2 148.00 97.50 13.00 30.50 9.75 113.75 - 27.00 - 62.79 70.81 (8.03) 8.03 -13% 13% 64.46
Q 3 128.00 102.75 13.25 35.00 10.50 116.25 - 30.00 - 62.25 67.65 (5.40) 5.40 -9% 9% 29.12
Q 4 127.00 122.50 14.00 29.75 10.50 120.00 - 32.00 - 65.11 64.01 1.10 1.10 2% 2% 1.20
Q 1 126.00 119.75 16.50 29.75 11.25 115.75 - 30.00 - 64.14 63.79 0.36 0.36 1% 1% 0.13
Q 2 120.50 99.00 13.25 34.00 12.75 97.00 - 29.00 - 57.93 64.05 (6.13) 6.13 -11% 11% 37.52
Q 3 100.00 99.00 12.00 30.00 12.00 90.00 - 27.00 - 52.86 61.23 (8.37) 8.37 -16% 16% 70.08
Q 4 53.00 69.75 7.25 22.25 10.25 68.00 - 28.50 - 37.00 56.64 (19.64) 19.64 -53% 53% 385.56
Q 1 68.00 78.00 9.00 23.75 9.50 70.00 - 36.00 - 42.04 45.94 (3.91) 3.91 -9% 9% 15.27
Q 2 135.25 119.00 16.50 30.50 13.75 109.00 - 35.00 - 65.57 42.69 22.88 22.88 35% 35% 523.59
Q 3 151.00 164.50 27.75 32.75 17.25 170.00 - 36.50 - 85.68 52.80 32.88 32.88 38% 38% 1,081.24
Q 4 167.00 170.25 19.50 36.75 20.25 204.25 - 37.00 - 93.57 70.92 22.65 22.65 24% 24% 513.18
Q 1 180.50 188.25 18.75 35.00 18.75 222.00 - 47.00 - 101.46 85.60 15.86 15.86 16% 16% 251.56
Q 2 267.75 281.00 28.50 55.50 32.00 359.25 - 81.75 - 157.96 95.94 62.03 62.03 39% 39% 3,847.10
Q 3 438.60 369.90 52.90 95.60 62.30 517.80 - 112.30 - 235.63 128.14 107.49 107.49 46% 46% 11,554.71
Q 4 200.20 399.90 45.80 83.40 52.00 271.90 - 97.80 - 164.43 185.50 (21.07) 21.07 -13% 13% 443.85
Q 1 171.80 380.00 46.20 76.30 51.30 288.30 - 75.20 35.80 140.61 184.50 (43.88) 43.88 -31% 31% 1,925.74
Q 2 146.40 205.30 44.90 66.20 26.00 240.10 - 68.60 25.40 102.86 166.76 (63.90) 63.90 -62% 62% 4,082.96
Q 3 128.30 198.00 40.20 61.90 25.10 218.10 - 65.10 22.00 94.84 126.50 (31.66) 31.66 -33% 33% 1,002.56
Q 4 112.90 151.30 39.60 57.00 25.40 195.00 - 67.60 19.00 83.48 106.40 (22.93) 22.93 -27% 27% 525.56
Q 1 112.60 153.00 29.30 56.90 23.50 179.80 94.50 66.90 17.50 81.56 90.76 (9.21) 9.21 -11% 11% 84.74
Q 2 110.40 147.00 21.00 47.00 17.30 152.00 85.10 59.80 13.50 72.57 84.79 (12.22) 12.22 -17% 17% 149.36
Q 3 122.30 166.00 25.00 61.90 20.90 215.70 90.90 69.10 16.90 87.63 77.45 10.19 10.19 12% 12% 103.80
Q 4 111.80 147.00 20.50 55.00 19.00 201.00 77.60 55.30 13.80 77.89 81.90 (4.01) 4.01 -5% 5% 16.07
Q 1 131.10 167.30 16.10 61.00 19.00 224.90 65.10 65.20 17.00 85.19 79.75 5.44 5.44 6% 6% 29.61
Q 2 138.00 161.20 16.50 62.90 19.00 204.70 71.20 67.00 17.40 84.21 83.49 0.72 0.72 1% 1% 0.52
Q 3 119.20 150.00 15.50 60.50 16.30 169.90 79.20 58.10 15.70 76.04 83.24 (7.20) 7.20 -9% 9% 51.78
Q 4 122.00 143.00 13.30 62.00 15.60 166.00 74.90 65.10 16.80 75.41 80.32 (4.91) 4.91 -7% 7% 24.13
2014 Q 1 77.36 (77.36) 77.36 5,984.74
Sum 3,352.83 3,199.75 (75.17) 707.23 -128% 652% 33,694.15
N 40 38 38 38 37 37 38
Mean Absolute Error 18.61
Mean Percentage Error (0.03)
Mean Absolute Percentage Error 0.18
Mean Squire Error 886.69
Root Mean Squire Error 29.78
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
18
Figure 4.2.1
-
100.00
200.00
300.00
400.00
500.00
600.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Banking Industry
DFCC
HNB
Merchant Bank
NTB
Pan Asia
Sampath
Sanasa Development
Seylan Bank
Union Bank
Industry Average Quarter Price (Yt)
Forecasted Share Price
19
Figure 4.2.2
-
50.00
100.00
150.00
200.00
250.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Banking Industry
IndustryAverageQuarterPrice (Yt)
Forecasted SharePrice
20
4.3 Beverage industry
Share prices of beverage industry were examined and tabulated (Refer table 4.3.1) to
forecasting the share prices for the first quarter of 2014. There were six listed quoted
companies namely Ceylon Brewery, Cargills, Keells Food, Nestle, Raigam Wayamba
Salterns Limited, Soy Foods were identified and selected to represent the beverage industry
over last ten years. Quarterly share prices were derived based on the average daily share
prices published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
beverage industry average share price was continuously increasing from the first quarter of
2012 to fourth quarter of 2013. (i.e. Rs. 281.08 to Rs. 520.48) (Refer table 4.3.1). Based on
the weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 500.78 which is above than the latest quarter share price of
Rs. 468.81 in the fourth quarter of 2013 (Refer figure 4.3.1 and 4.3.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.28 and mean percentage error was – 0.03 (Refer table 4.3.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, beverage industry is one
of share price increasing industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the beverage industry. However, it was noted
that the share prices of individual companies as well as the industry as a whole have started to
increase during the period from the first quarter of 2012 to fourth quarter of 2013 and then
started to increase continuously up to fourth quarter of 2013 and thereafter forecasted that the
share prices of whole industry would further be increased (Refer figure 4.3.1 and 4.3.2).
When further analyzing of beverage industry, I could noted that Nestle Plc has reported the
highest share price Rs. 2,242.00 in fourth quarter of 2013 (Refer table 4.3.1). At the end of
fourth quarter of 2013, Rs. 2,242.00 (Refer figure 4.3.1 and 4.3.2) average share price was
reported as the highest company share prices of the beverage industry. However, when
considering the each company separately in the beverage industry all six companies’ share
prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted
share price going to be further increased which required to be taken the wise decisions by the
investors who are existing in the beverage industry and potential investors who are going to
invest in the beverage industry in the future mainly including the foreign investors.
21
Table 4.3.1
Bewerage Industry
Year Quarter
Ceylon
Brewery Cargills
Keells
Food Nestle
Raigam
Wayamba
Salterns
Limited
Soy
Foods
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 95.00 120.00 17.00 91.00 - 27.00 70.00
Q 2 96.00 300.00 21.00 86.00 - 37.75 108.15
Q 3 85.25 299.00 23.50 84.00 - 29.25 104.20
Q 4 76.00 250.00 29.50 88.50 - 36.00 96.00 98.55 (2.55) 2.55 -3% 3% 6.48
Q 1 80.25 275.00 38.00 95.00 - 46.50 106.95 100.89 6.06 6.06 6% 6% 36.72
Q 2 90.00 290.00 52.00 96.00 - 47.50 115.10 103.12 11.99 11.99 10% 10% 143.64
Q 3 150.00 675.00 59.50 103.00 - 81.00 213.70 108.84 104.87 104.87 49% 49% 10,996.67
Q 4 75.00 525.00 32.00 111.00 - 60.00 160.60 162.77 (2.17) 2.17 -1% 1% 4.71
Q 1 92.00 550.00 34.00 175.00 - 84.75 187.15 167.43 19.72 19.72 11% 11% 388.88
Q 2 85.00 515.00 26.00 180.50 - 70.00 175.30 184.50 (9.19) 9.19 -5% 5% 84.55
Q 3 88.00 545.00 34.25 240.00 - 80.50 197.55 175.92 21.64 21.64 11% 11% 468.07
Q 4 100.00 750.00 45.00 275.00 - 77.25 249.45 188.80 60.66 60.66 24% 24% 3,679.03
Q 1 85.00 450.00 49.75 260.00 - 65.00 181.95 219.05 (37.10) 37.10 -20% 20% 1,376.41
Q 2 67.00 500.00 40.00 254.00 - 61.00 184.40 205.32 (20.92) 20.92 -11% 11% 437.65
Q 3 79.00 750.00 51.00 260.00 - 80.00 244.00 196.68 47.33 47.33 19% 19% 2,239.66
Q 4 60.50 889.00 49.75 262.75 - 80.00 268.40 213.71 54.69 54.69 20% 20% 2,991.00
Q 1 67.00 1,999.75 56.00 251.00 - 80.00 490.75 244.28 246.47 246.47 50% 50% 60,747.46
Q 2 61.00 41.00 60.00 280.00 - 72.50 102.90 374.70 (271.80) 271.80 -264% 264% 73,872.52
Q 3 66.25 31.00 62.50 315.75 - 84.00 111.90 252.36 (140.46) 140.46 -126% 126% 19,727.61
Q 4 42.50 22.50 58.00 260.00 - 70.00 90.60 184.97 (94.37) 94.37 -104% 104% 8,905.70
Q 1 51.00 23.50 505.00 275.00 - 71.00 185.10 99.45 85.65 85.65 46% 46% 7,335.92
Q 2 72.50 49.00 61.75 350.00 - 90.00 124.65 142.11 (17.46) 17.46 -14% 14% 304.85
Q 3 85.00 57.00 69.75 405.00 - 100.00 143.35 135.98 7.38 7.38 5% 5% 54.39
Q 4 112.00 65.25 75.00 415.00 - 120.00 157.45 146.09 11.36 11.36 7% 7% 129.05
Q 1 180.00 70.50 69.00 490.00 4.30 144.50 159.72 146.66 13.06 13.06 8% 8% 170.48
Q 2 225.00 128.00 70.50 620.00 4.20 132.00 196.62 155.76 40.85 40.85 21% 21% 1,668.99
Q 3 325.00 207.40 139.80 670.00 4.30 150.00 249.42 177.71 71.70 71.70 29% 29% 5,141.37
Q 4 320.00 195.40 133.00 663.00 4.00 165.00 246.73 215.64 31.10 31.10 13% 13% 967.00
Q 1 370.00 228.30 150.00 640.80 4.50 405.20 299.80 237.52 62.29 62.29 21% 21% 3,879.42
Q 2 500.00 198.50 110.80 704.40 4.50 350.00 311.37 273.80 37.56 37.56 12% 12% 1,411.00
Q 3 436.00 201.90 118.30 875.70 4.50 393.20 338.27 294.97 43.30 43.30 13% 13% 1,874.60
Q 4 400.00 203.00 124.50 877.00 4.30 295.00 317.30 322.50 (5.20) 5.20 -2% 2% 27.07
Q 1 320.00 174.00 103.80 910.80 3.10 174.80 281.08 322.40 (41.32) 41.32 -15% 15% 1,707.34
Q 2 263.50 140.00 90.10 1,100.00 2.60 169.00 294.20 303.39 (9.19) 9.19 -3% 3% 84.36
Q 3 360.00 164.80 75.10 1,250.00 3.00 159.10 335.33 294.89 40.45 40.45 12% 12% 1,636.07
Q 4 400.00 145.50 72.90 1,500.00 2.50 135.00 375.98 312.14 63.84 63.84 17% 17% 4,075.55
Q 1 474.90 151.80 70.10 1,680.00 2.20 139.00 419.67 347.43 72.24 72.24 17% 17% 5,217.90
Q 2 503.90 169.90 70.00 1,940.50 2.30 195.00 480.27 389.70 90.57 90.57 19% 19% 8,203.23
Q 3 500.00 155.00 63.90 1,964.30 2.30 204.10 481.60 441.23 40.37 40.37 8% 8% 1,629.74
Q 4 480.10 147.50 56.00 2,242.00 2.20 195.10 520.48 468.81 51.67 51.67 10% 10% 2,669.79
2014 Q 1 500.78 (500.78) 500.78 250,775.60
Sum 9,377.43 8,910.80 184.29 2,489.27 -109% 1027% 485,070.47
N 40 38 38 38 37 37 38
Mean Absolute Error 65.51
Mean Percentage Error (0.03)
Mean Absolute Percentage Error 0.28
Mean Squire Error 12,765.01
Root Mean Squire Error 112.98
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
22
Figure 4.3.1
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er
Shar
e
Beverage Industry
Ceylon Brewery
Cargills
Keells Food
Nestle
Raigam Wayamba SalternsLimited
Soy Foods
Industry Average Quarter Price(Yt)
Forecasted Share Price
23
Figure 4.3.2
-
100.00
200.00
300.00
400.00
500.00
600.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Beverage Industry
Industry AverageQuarter Price (Yt)
Forecasted SharePrice
24
4.4 Diversified holding industry
Share prices of diversified holding industry were examined and tabulated (Refer table 4.4.1)
to forecasting the share prices for the first quarter of 2014. There were ten listed quoted
companies namely Ceylinco Housing, Expolanka Holdings Limited, Harischandra, Hayleys,
Hemas, John Keells Holding, John Keells, Richard Pieris, Softlogic Holdings Ltd, and
Sunshine Holding were identified and selected to represent the diversified holding industry
over last ten years. Quarterly share prices were derived based on the average daily share
prices published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
diversified holding industry average share price was continuously decreasing from the fourth
quarter of 2012 to fourth quarter of 2013. (I.e. Rs. 318.39 to Rs. 283.24) (Refer table 4.4.1).
Based on the weighted moving average forecasting method, the forecasted share prices for
the first quarter of 2014 would be Rs. 284.44 which is below than the latest quarter share
price of Rs. 292.62 in the fourth quarter of 2013 (Refer figure 4.4.1 and 4.4.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.11 and mean percentage error was – 0.03 (Refer table 4.4.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, diversified holding
industry is one of share price decline industry which required taking the prudent decision
whether to invest, hold or divest the investment made in the diversified holding industry.
However, it was noted that the share prices of individual companies as well as the industry as
a whole have started to decline from the fourth quarter of 2012 to fourth quarter of 2013 and
thereafter forecasted that the share prices of whole industry would further be declined (Refer
figure 4.4.1 and 4.4.2).
When further analyzing of diversified holding industry, I could noted that Harischandra Plc
has reported the highest share price Rs. 2,990.00 in fourth quarter of 2011 (Refer table 4.4.1).
At the end of fourth quarter of 2013, Rs. 2,150.00 (Refer figure 4.4.1 and 4.4.2) average share
price was reported as the highest company share prices of the diversified holding industry.
However, when considering the each company separately in the diversified holding industry
all ten companies’ share prices which ware forecasted for the first quarter of 2014, it was
noted that the forecasted share price going to be further declined except Hayleys and Hemas
(i.e. these two companies’ forecasted share price going to be increased.) which required to be
taken the wise decisions by the investors who are existing and mainly the potential.
25
Table 4.4.1
Diversified Holdings Companies
Year Quarter
Ceylinco
Housing
Expolan
ka
Holdings
Limited
Harischa
ndra Hayleys Hemas
John
Keells
Holding
John
Keells
Richard
Pieris
Softlogic
Holdings
Ltd
Sunshine
Holding
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 9.75 - 162.25 115.00 88.25 111.00 130.00 93.00 - 24.00 91.66
Q 2 11.00 - 185.00 131.50 91.00 107.50 134.75 95.00 - 41.75 99.69
Q 3 14.00 - 350.00 121.00 90.00 106.00 135.00 102.50 - 95.00 126.69
Q 4 19.00 - 308.00 126.00 96.75 110.00 125.00 120.00 - 70.00 121.84 111.58 10.26 10.26 8% 8% 105.32
Q 1 38.75 - 398.00 112.50 109.00 137.50 145.00 165.00 - 75.75 147.69 118.87 28.82 28.82 20% 20% 830.70
Q 2 32.00 - 270.00 119.00 103.00 128.75 92.00 172.00 - 80.00 124.59 135.73 (11.14) 11.14 -9% 9% 124.11
Q 3 75.00 - 357.00 133.00 130.00 174.00 130.00 103.00 - 150.00 156.50 130.97 25.53 25.53 16% 16% 651.69
Q 4 32.00 - 375.00 97.00 104.00 130.00 90.00 67.75 - 95.00 123.84 145.17 (21.32) 21.32 -17% 17% 454.62
Q 1 47.00 - 330.00 98.50 110.75 158.00 100.00 75.00 - 155.00 134.28 133.79 0.49 0.49 0% 0% 0.24
Q 2 44.00 - 375.00 88.00 103.00 132.00 83.50 63.00 - 127.00 126.94 135.59 (8.66) 8.66 -7% 7% 74.93
Q 3 53.00 - 400.00 108.25 107.75 136.75 95.00 74.50 - 150.00 140.66 128.52 12.13 12.13 9% 9% 147.24
Q 4 36.25 - 330.00 131.00 119.00 195.00 89.00 78.00 - 165.00 142.91 135.27 7.64 7.64 5% 5% 58.38
Q 1 31.75 - 400.00 142.00 107.00 155.00 85.25 65.00 - 125.00 138.88 139.04 (0.16) 0.16 0% 0% 0.03
Q 2 27.50 - 425.00 132.00 102.50 145.50 80.50 54.25 - 125.00 136.53 140.44 (3.91) 3.91 -3% 3% 15.28
Q 3 36.25 - 410.00 112.50 100.25 129.00 78.00 39.75 - 126.00 128.97 138.51 (9.54) 9.54 -7% 7% 91.02
Q 4 32.00 - 425.00 107.75 95.00 127.25 96.00 47.50 - 172.25 137.84 133.22 4.63 4.63 3% 3% 21.39
Q 1 31.25 - 450.00 97.75 87.50 119.50 90.00 39.00 - 160.00 134.38 134.92 (0.54) 0.54 0% 0% 0.30
Q 2 26.50 - 450.00 135.75 81.00 110.00 94.75 41.25 - 130.00 133.66 134.33 (0.68) 0.68 -1% 1% 0.46
Q 3 24.25 - 455.00 129.00 78.00 86.50 80.00 43.50 - 145.00 130.16 134.71 (4.55) 4.55 -3% 3% 20.73
Q 4 12.00 - 450.00 86.00 55.25 50.00 60.00 22.50 - 120.00 106.97 132.05 (25.08) 25.08 -23% 23% 629.07
Q 1 8.00 - 476.25 90.00 60.25 62.75 62.00 25.00 - 196.00 122.53 119.26 3.27 3.27 3% 3% 10.68
Q 2 28.25 - 750.00 132.00 95.00 136.75 92.75 39.00 - 162.25 179.50 119.39 60.11 60.11 33% 33% 3,613.51
Q 3 31.25 - 750.00 154.00 130.00 151.00 152.00 41.00 - 150.00 194.91 147.90 47.00 47.00 24% 24% 2,209.29
Q 4 21.25 - 755.00 171.00 122.75 171.50 153.00 39.00 - 155.00 198.56 175.81 22.75 22.75 11% 11% 517.70
Q 1 19.00 - 941.75 225.00 120.00 184.00 194.50 55.00 - 325.00 258.03 193.65 64.38 64.38 25% 25% 4,144.54
Q 2 25.75 - 941.75 305.00 184.25 205.00 239.00 88.00 - 54.50 255.41 227.57 27.84 27.84 11% 11% 775.10
Q 3 26.70 - 1,000.00 349.50 50.20 319.50 206.50 168.00 - 55.00 271.93 244.83 27.10 27.10 10% 10% 734.41
Q 4 20.80 - 950.00 345.00 11.50 298.40 204.50 10.50 - 45.90 235.83 264.19 (28.37) 28.37 -12% 12% 804.61
Q 1 20.00 13.70 1,050.00 382.10 46.00 285.60 185.20 13.60 24.60 42.10 206.29 250.57 (44.28) 44.28 -21% 21% 1,960.83
Q 2 19.10 12.70 1,900.10 379.60 44.60 201.00 205.00 12.00 23.00 43.00 284.01 228.28 55.73 55.73 20% 20% 3,106.11
Q 3 23.00 12.00 2,400.00 375.00 39.00 205.90 86.20 10.20 22.10 38.00 321.14 251.06 70.08 70.08 22% 22% 4,911.63
Q 4 18.60 9.00 2,990.00 375.00 33.00 170.20 75.00 9.00 18.00 29.00 372.68 287.03 85.65 85.65 23% 23% 7,335.75
Q 1 14.60 6.20 2,199.00 360.00 26.30 206.00 66.20 7.50 11.20 20.00 291.70 339.48 (47.78) 47.78 -16% 16% 2,283.31
Q 2 11.90 6.00 2,400.00 337.00 22.10 182.80 59.40 6.70 10.20 25.00 306.11 321.88 (15.77) 15.77 -5% 5% 248.76
Q 3 20.40 7.70 2,226.80 319.40 30.50 229.10 70.50 8.90 12.00 31.00 295.63 315.10 (19.47) 19.47 -7% 7% 379.12
Q 4 15.90 7.10 2,499.50 304.70 26.60 219.40 64.50 7.80 10.80 27.60 318.39 297.99 20.40 20.40 6% 6% 416.24
Q 1 14.50 6.80 2,488.00 298.70 27.00 247.00 61.30 6.60 10.40 26.60 318.69 309.11 9.58 9.58 3% 3% 91.85
Q 2 13.30 6.90 2,000.00 306.30 34.50 251.30 83.80 6.90 9.90 34.50 274.74 313.99 (39.25) 39.25 -14% 14% 1,540.41
Q 3 10.70 6.80 2,250.00 290.00 32.00 218.00 75.00 6.50 8.70 31.40 292.91 296.66 (3.75) 3.75 -1% 1% 14.03
Q 4 10.20 7.50 2,150.00 305.00 33.00 215.00 68.30 6.40 8.40 28.60 283.24 292.62 (9.38) 9.38 -3% 3% 87.89
2014 Q 1 284.44 (284.44) 284.44 80,906.68
Sum 7,866.87 7,543.50 5.34 1,161.48 102% 405% 119,317.97
N 40 38 38 38 37 37 38
Mean Absolute Error 30.57
Mean Percentage Error 0.03
Mean Absolute Percentage Error 0.11
Mean Squire Error 3,139.95
Root Mean Squire Error 56.04
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
26
Figure 4.4.1
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
hare
Diversified Holding Companies
Ceylinco Housing
Expolanka HoldingsLimitedHarischandra
Hayleys
Hemas
John Keells Holding
John Keells
Richard Pieris
Softlogic Holdings Ltd
Sunshine Holding
Industry Average QuarterPrice (Yt)Forecasted Share Price
27
Figure 4.4.2
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
hare
Diversified Holding Companies
IndustryAverageQuarter Price(Yt)
ForecastedShare Price
28
4.5 Finance and investment industry
Share prices of finance and investment industry were examined and tabulated (Refer table
4.5.1) to forecasting the share prices for the first quarter of 2014. There were twenty two
listed quoted companies mainly including namely Arpico Finance, Central Finance, LB
Finance, LOLC, HDFC, First Capital Holdings, and The Finance Co were identified and
selected to represent the finance and investment industry over last ten years. Quarterly share
prices were derived based on the average daily share prices published in the Colombo Stock
Exchange web site.
According to the selected forecasting technique of weighted moving average method, finance
and investment industry average share price was continuously decreasing from the second
quarter of 2012 to fourth quarter of 2013. (I.e. Rs. 209.93 to Rs. 37.73) (Refer table 4.5.1).
Based on the weighted moving average forecasting method, the forecasted share prices for
the first quarter of 2014 would be Rs. 38.80 which is below than the latest quarter share
price of Rs. 39.72 in the fourth quarter of 2013 (Refer figure 4.5.1 and 4.5.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.25 and mean percentage error was – 0.11 (Refer table 4.5.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, finance and investment
industry is one of share price decline industry which required taking the prudent decision
whether to invest, hold or divest the investment made in the finance and investment industry.
However, it was noted that the share prices of individual companies as well as the industry as
a whole have started to decline from the first quarter of 2011 to fourth quarter of 2013 and
thereafter forecasted that the share prices of whole industry would further be declined (Refer
figure 4.5.1 and 4.5.2).
When further analyzing of finance and investment industry, I could noted that HDFC Plc has
reported the highest share price Rs. 1795.30 in second quarter of 2011 (Refer table 4.5.1). At
the end of fourth quarter of 2013, Rs. 29.00 (Refer figure 4.5.1 and 4.5.2) average share price
was reported as the highest company share prices of the finance and investment industry.
However, when considering the each company separately in the finance and investment
industry all twenty two companies’ share prices which ware forecasted for the first quarter of
2014, it was noted that the forecasted share price going to be further declined except First
Capital Holdings and LOLC (i.e. these two companies’ forecasted share price going to be
increased.) which required to be taken the wise decisions by the investors.
29
Table 4.5.1
Finance & Investment Industry
Year Quarter
Asia
Asset
Finance
Limited
Asia
Capital
Abans
Financial
Services
Ltd
Arpico
Finance
Browns
Investm
ents Ltd
Capital
Alliance
Finance
Ltd
Citizens
Develop
ment
Busines
s
Finance
Central
Finance
Chilaw
Finance
Limited
First
Capital
Holdings
Ceylon
Inv
Commer
cial
Credit
Ltd HDFC
LB
Finance
Lanka
Orix
Finance
Co. Ltd LOLC
Softlogic
Capital
Limited
Singer
Finance
(Lanka)
Ltd
Sinhaput
hra
Finance
Limited
Swarnam
ahal
Financial
Services
Limited
The
Finance
Co
Vallibel
Finance
Limited
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 - 18.00 - 14.25 - - - 224.00 - 4.75 160.00 - 195.00 14.00 - 62.00 - - - - 17.00 - 78.78
Q 2 - 16.50 - 25.75 - - - 269.00 - 5.75 223.00 - 195.00 12.75 - 69.00 - - - - 17.50 - 92.69
Q 3 - 14.75 - 26.75 - - - 235.25 - 6.50 86.25 - 195.00 15.00 - 72.00 - - - - 20.00 - 74.61
Q 4 - 13.00 - 24.75 - - - 270.00 - 5.75 90.00 - 285.00 43.75 - 80.00 - - - - 19.00 - 92.36 80.87 11.49 11.49 12% 12% 132.06
Q 1 - 19.50 - 40.00 - - - 147.00 - 7.50 101.00 - 277.00 50.00 - 85.00 - - - - 56.50 - 87.06 87.10 (0.05) 0.05 0% 0% 0.00
Q 2 - 15.00 - 65.00 - - - 143.00 - 6.25 79.00 - 240.00 45.00 - 94.00 - - - - 46.00 - 81.47 86.16 (4.69) 4.69 -6% 6% 21.96
Q 3 - 15.75 - 85.00 - - - 202.00 - 6.50 112.00 - 190.00 90.00 - 102.00 - - - - 61.50 - 96.08 85.33 10.76 10.76 11% 11% 115.74
Q 4 - 12.00 - 60.00 - - - 152.00 - 4.50 67.00 - 180.00 70.00 - 101.00 - - - - 34.50 - 75.67 89.89 (14.23) 14.23 -19% 19% 202.43
Q 1 - 15.25 - 80.00 - - - 205.00 - 8.50 81.25 - 168.00 85.00 - 102.00 - - - - 60.25 - 89.47 82.95 6.52 6.52 7% 7% 42.50
Q 2 - 12.25 - 78.00 - - - 175.00 - 10.00 63.00 - 171.00 80.00 - 94.00 - - - - 50.00 - 81.47 86.65 (5.18) 5.18 -6% 6% 26.84
Q 3 - 13.75 - 104.50 - - - 190.00 - 9.50 78.75 - 176.00 61.00 - 99.75 - - - - 57.00 - 87.81 82.71 5.09 5.09 6% 6% 25.95
Q 4 - 15.50 - 95.00 - - - 231.00 - 14.50 95.00 - 162.00 39.50 - 103.00 - - - - 54.00 - 89.94 86.24 3.71 3.71 4% 4% 13.73
Q 1 - 14.00 - 90.00 - - - 235.00 - 17.50 101.00 - 164.25 35.25 - 110.00 - - - - 47.75 - 90.53 87.61 2.92 2.92 3% 3% 8.52
Q 2 - 13.50 - 80.00 - - - 209.50 - 14.50 80.00 - 142.00 29.00 - 102.00 - - - - 48.00 - 79.83 89.81 (9.98) 9.98 -12% 12% 99.50
Q 3 - 13.75 - 80.00 - - - 200.00 - 15.00 85.50 - 128.00 39.00 - 102.25 - - - - 62.00 - 80.61 85.06 (4.45) 4.45 -6% 6% 19.83
Q 4 - 11.50 - 79.50 - - - 199.00 - 11.25 84.50 - 119.75 20.75 - 136.50 - - - - 60.50 - 80.36 82.36 (2.00) 2.00 -2% 2% 4.00
Q 1 - 10.25 - 56.00 - - - 200.00 - 10.25 78.00 - 110.25 22.50 - 117.75 - - - - 63.00 - 74.22 80.33 (6.11) 6.11 -8% 8% 37.31
Q 2 - 9.00 - 62.00 - - - 227.00 - 10.25 81.00 - 90.25 20.25 - 112.50 - - - - 52.00 - 73.81 77.34 (3.54) 3.54 -5% 5% 12.50
Q 3 - 9.75 - 65.00 - - - 195.25 - 9.75 75.00 - 56.00 20.00 - 99.00 - - - - 49.00 - 64.31 75.24 (10.94) 10.94 -17% 17% 119.60
Q 4 - 5.25 - 30.00 - - - 165.00 - 5.00 45.00 - 50.75 15.50 - 58.00 - - - - 27.25 - 44.64 69.14 (24.50) 24.50 -55% 55% 600.25
Q 1 - 5.75 - 33.00 - - - 157.00 - 9.75 58.00 - 85.00 19.00 - 69.25 - - - - 22.00 - 50.97 56.37 (5.40) 5.40 -11% 11% 29.16
Q 2 - 7.50 - 41.50 - - - 234.00 - 13.25 95.00 - 157.00 39.50 - 105.00 - - - - 26.00 - 79.86 51.74 28.12 28.12 35% 35% 790.86
Q 3 - 8.00 - 41.75 - - - 300.00 - 15.00 170.00 - 147.75 37.75 - 130.00 - - - - 27.25 - 97.50 64.15 33.35 33.35 34% 34% 1,112.22
Q 4 - 10.25 - 45.00 - - - 317.50 - 27.00 247.50 - 143.00 46.50 - 137.00 - - - - 19.25 - 110.33 82.90 27.43 27.43 25% 25% 752.44
Q 1 - 13.00 - 64.50 - - 56.10 390.00 - 58.00 271.00 - 281.25 62.00 - 165.00 - - 106.00 - 17.50 - 134.94 100.39 34.55 34.55 26% 26% 1,193.84
Q 2 - 28.75 - 84.50 - - 46.30 499.25 - 19.75 300.50 - 436.40 146.25 - 286.25 - - 77.00 - 22.00 39.25 165.52 120.07 45.45 45.45 27% 27% 2,065.36
Q 3 - 45.40 - 143.30 - - 47.30 902.70 - 19.10 624.90 - 550.00 291.60 - 1,439.90 - - 81.80 - 63.70 89.90 358.30 145.31 212.99 212.99 59% 59% 45,365.90
Q 4 - 47.00 - 110.00 - - 52.50 818.50 - 19.00 121.80 - 1,125.90 261.90 - 127.80 - - 76.00 - 38.90 83.10 240.20 255.79 (15.59) 15.59 -6% 6% 243.15
Q 1 - 87.80 65.20 114.70 5.00 39.20 81.20 1,273.70 22.20 22.10 151.00 30.90 1,480.00 175.10 10.80 119.60 47.30 36.50 91.00 40.00 37.00 49.50 189.51 260.69 (71.18) 71.18 -38% 38% 5,066.46
Q 2 - 105.20 81.00 109.90 4.80 36.70 81.00 1,389.00 27.70 21.00 129.10 28.70 1,795.30 176.90 10.80 100.30 35.20 29.80 101.00 71.00 29.60 44.50 209.93 238.48 (28.55) 28.55 -14% 14% 815.02
Q 3 - 87.00 70.00 135.00 4.90 36.10 70.10 267.10 25.70 18.50 120.30 31.00 1,400.30 156.30 9.00 98.80 35.00 33.10 121.00 76.50 42.20 44.20 137.24 209.86 (72.62) 72.62 -53% 53% 5,273.04
Q 4 - 64.40 67.90 119.90 4.20 36.50 65.00 203.00 22.40 16.10 110.00 23.70 68.40 138.60 8.10 83.30 34.80 27.00 102.00 93.00 40.50 43.30 65.34 169.50 (104.16) 104.16 -159% 159% 10,850.30
Q 1 3.90 37.50 40.50 93.00 3.30 37.80 40.50 171.00 14.90 11.00 78.10 16.00 60.30 134.90 4.50 54.00 16.20 16.20 88.90 150.00 30.10 38.80 51.88 115.83 (63.95) 63.95 -123% 123% 4,089.07
Q 2 2.90 31.00 34.10 85.10 2.70 22.20 36.60 128.60 14.40 10.00 69.00 14.50 65.50 121.20 3.50 37.00 6.30 12.30 80.00 6.90 23.50 31.50 38.13 72.99 (34.86) 34.86 -91% 91% 1,215.47
Q 3 3.20 34.60 38.50 90.00 4.00 27.40 42.80 180.00 19.00 15.00 102.80 16.80 50.80 150.40 4.60 50.50 7.00 15.90 88.30 5.10 27.90 40.00 46.12 47.70 (1.58) 1.58 -3% 3% 2.49
Q 4 2.60 30.30 38.60 69.50 4.00 20.10 41.00 160.00 14.00 12.30 84.00 16.30 40.00 148.00 3.80 53.90 7.10 13.70 82.00 3.10 18.70 31.10 40.64 44.87 (4.23) 4.23 -10% 10% 17.92
Q 1 2.20 22.80 29.00 92.00 3.30 14.30 40.10 180.00 10.40 11.20 80.00 12.90 40.00 132.70 3.30 57.00 5.60 12.60 73.50 3.20 12.60 28.30 39.41 41.78 (2.37) 2.37 -6% 6% 5.63
Q 2 2.30 25.70 32.60 103.90 3.00 18.50 47.50 182.00 13.30 18.90 93.60 13.10 28.00 127.20 3.10 60.20 5.90 13.00 73.20 2.40 13.00 31.30 41.44 41.12 0.32 0.32 1% 1% 0.10
Q 3 2.20 21.00 31.50 93.50 2.60 15.50 41.00 185.50 12.80 14.80 77.00 10.80 29.50 109.90 3.00 58.20 3.50 11.20 90.00 1.90 8.60 30.00 38.82 40.67 (1.85) 1.85 -5% 5% 3.43
Q 4 1.80 17.60 30.00 93.00 2.30 14.90 41.10 175.10 12.70 16.50 76.00 10.40 29.00 100.00 2.80 70.40 3.80 11.70 80.10 2.10 8.80 30.00 37.73 39.72 (1.99) 1.99 -5% 5% 3.97
2014 Q 1 38.80 (38.80) 38.80 1,505.40
Sum 3,789.54 3,653.54 (110.08) 955.49 -410% 913% 81,883.96
N 0 40 38 38 38 37 37 38
Mean Absolute Error 25.14
Mean Percentage Error (0.11)
Mean Absolute Percentage Error 0.25
Mean Squire Error 2,154.84
Root Mean Squire Error 46.42
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
30
Figure 4.5.1
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
1,800.00
2,000.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Finance and Investment Industry Asia Asset Finance Limited
Asia Capital
Abans Financial Services Ltd
Arpico Finance
Browns Investments Ltd
Capital Alliance Finance Ltd
Citizens Development Business Finance
Central Finance
Chilaw Finance Limited
First Capital Holdings
Ceylon Inv
Commercial Credit Ltd
HDFC
LB Finance
Lanka Orix Finance Co. Ltd
LOLC
Softlogic Capital Limited
Singer Finance (Lanka) Ltd
Sinhaputhra Finance Limited
Swarnamahal Financial Services Limited
The Finance Co
Vallibel Finance Limited
Industry Average Quarter Price (Yt)
Forecasted Share Price
31
Figure 4.5.2
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce P
er S
ha
re
Finance & Investment Industry
IndustryAverageQuarter Price(Yt)
ForecastedShare Price
32
4.6 Footwear and textile industry
Share prices of footwear and textile industry were examined and tabulated (Refer table 4.6.1)
to forecasting the share prices for the first quarter of 2014. There were four listed quoted
companies namely Ceylon Leather, Kuruwita Textile, ODEL, and Orient Garments Ltd were
identified and selected to represent the footwear and textile industry over last ten years.
Quarterly share prices were derived based on the average daily share prices published in the
Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
footwear and textile industry average share price was continuously decreasing from the
second quarter of 2010 to fourth quarter of 2013. (I.e. Rs. 102.00 to Rs. 26.85) (Refer table
4.6.1). Based on the weighted moving average forecasting method, the forecasted share prices
for the first quarter of 2014 would be Rs. 28.12 which is below than the latest quarter share
price of Rs. 29.11 in the fourth quarter of 2013 (Refer figure 4.6.1 and 4.6.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.16 and mean percentage error was – 0.03 (Refer table 4.6.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, footwear and textile
industry is one of share price decline industry which required to take the prudent decision
whether to invest, hold or divest the investment made in the footwear and textile industry.
However, it was noted that the share prices of individual companies as well as the industry as
a whole have started to decline from the second quarter of 2010 to fourth quarter of 2013 and
thereafter forecasted that the share prices of whole industry would further be declined (Refer
figure 4.6.1 and 4.6.2).
When further analyzing of footwear and textile industry, I could noted that Ceylon Leather
has reported the highest share price Rs. 234.00 in second quarter of 2010 (Refer table 4.6.1).
At the end of fourth quarter of 2013, Rs. 62.50 (Refer figure 4.6.1 and 4.6.2) average share
price was reported as the highest company share prices of the footwear and textile industry.
However, when considering the each company separately in the footwear and textile industry
all four companies’ share prices which ware forecasted for the first quarter of 2014, it was
noted that the forecasted share price going to be further declined except Orient Garments Ltd
(i.e. this company’s forecasted share price going to be increased.) which required to be taken
the wise decisions by the investors who are existing and mainly the potential.
33
Table 4.6.1
Footwear & Textile Industry
Year Quarter
Ceylon
Leather
Kuruwit
a Textile ODEL
Orient
Garment
s Ltd
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 7.25 32.25 - - 19.75
Q 2 8.75 40.25 - - 24.50
Q 3 8.50 49.75 - - 29.13
Q 4 7.75 48.75 - - 28.25 25.86 2.39 2.39 8% 8% 5.70
Q 1 15.00 55.00 - - 35.00 27.76 7.24 7.24 21% 21% 52.38
Q 2 18.25 50.00 - - 34.13 31.80 2.33 2.33 7% 7% 5.41
Q 3 16.75 45.00 - - 30.88 33.21 (2.34) 2.34 -8% 8% 5.46
Q 4 10.50 40.00 - - 25.25 32.68 (7.43) 7.43 -29% 29% 55.13
Q 1 22.50 53.00 - - 37.75 28.71 9.04 9.04 24% 24% 81.68
Q 2 15.50 42.00 - - 28.75 32.63 (3.88) 3.88 -13% 13% 15.02
Q 3 17.00 51.00 - - 34.00 30.75 3.25 3.25 10% 10% 10.56
Q 4 18.00 56.00 - - 37.00 33.18 3.83 3.83 10% 10% 14.63
Q 1 21.50 58.00 - - 39.75 34.45 5.30 5.30 13% 13% 28.09
Q 2 23.75 47.00 - - 35.38 37.78 (2.40) 2.40 -7% 7% 5.76
Q 3 39.25 42.50 - - 40.88 37.01 3.86 3.86 9% 9% 14.92
Q 4 76.75 43.00 - - 59.88 39.00 20.88 20.88 35% 35% 435.77
Q 1 68.00 40.00 - - 54.00 49.28 4.72 4.72 9% 9% 22.33
Q 2 68.75 37.50 - - 53.13 53.14 (0.01) 0.01 0% 0% 0.00
Q 3 63.00 34.25 - - 48.63 54.74 (6.11) 6.11 -13% 13% 37.36
Q 4 47.75 20.75 - - 34.25 51.05 (16.80) 16.80 -49% 49% 282.24
Q 1 50.00 24.75 - - 37.38 42.34 (4.96) 4.96 -13% 13% 24.63
Q 2 52.25 33.25 - - 42.75 38.69 4.06 4.06 10% 10% 16.50
Q 3 62.00 32.75 - - 47.38 39.44 7.94 7.94 17% 17% 63.00
Q 4 56.00 35.50 - - 45.75 43.99 1.76 1.76 4% 4% 3.11
Q 1 87.75 40.00 30.70 - 52.82 45.64 7.18 7.18 14% 14% 51.54
Q 2 234.00 39.50 32.50 - 102.00 49.61 52.39 52.39 51% 51% 2,744.89
Q 3 129.20 37.00 32.40 - 66.20 76.00 (9.80) 9.80 -15% 15% 95.94
Q 4 92.60 30.00 36.40 - 53.00 74.26 (21.26) 21.26 -40% 40% 452.13
Q 1 90.00 28.50 38.20 25.90 45.65 66.76 (21.11) 21.11 -46% 46% 445.63
Q 2 95.30 27.20 36.50 34.60 48.40 51.97 (3.57) 3.57 -7% 7% 12.71
Q 3 84.70 29.00 35.40 31.40 45.13 48.50 (3.37) 3.37 -7% 7% 11.36
Q 4 99.60 23.90 32.30 31.10 46.73 46.21 0.51 0.51 1% 1% 0.26
Q 1 91.90 25.70 19.80 18.70 39.03 46.58 (7.56) 7.56 -19% 19% 57.08
Q 2 79.50 24.50 17.60 13.30 33.73 42.56 (8.83) 8.83 -26% 26% 77.97
Q 3 89.90 26.00 25.00 18.90 39.95 37.92 2.04 2.04 5% 5% 4.14
Q 4 77.90 20.30 19.70 14.20 33.03 37.90 (4.87) 4.87 -15% 15% 23.74
Q 1 62.30 22.00 21.00 7.90 28.30 35.24 (6.94) 6.94 -25% 25% 48.20
Q 2 74.10 22.30 22.10 7.60 31.53 32.05 (0.52) 0.52 -2% 2% 0.27
Q 3 68.50 18.20 19.20 6.00 27.98 30.86 (2.88) 2.88 -10% 10% 8.31
Q 4 62.50 18.00 19.00 7.90 26.85 29.11 (2.26) 2.26 -8% 8% 5.09
2014 Q 1 28.12 (28.12) 28.12 790.88
Sum 1,623.79 1,576.72 (26.31) 303.72 -106% 601% 6,009.80
N 40 38 38 38 37 37 38
Mean Absolute Error 7.99
Mean Percentage Error (0.03)
Mean Absolute Percentage Error 0.16
Mean Squire Error 158.15
Root Mean Squire Error 12.58
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
34
Figure 4.6.1
-
50.00
100.00
150.00
200.00
250.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Footwear and Textile Industry
Ceylon Leather
Kuruwita Textile
ODEL
Orient GarmentsLtd
Industry AverageQuarter Price (Yt)
Forecasted SharePrice
35
Figure 4.6.2
-
20.00
40.00
60.00
80.00
100.00
120.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Footwear and Textile Industry
IndustryAverageQuarter Price(Yt)
ForecastedShare Price
36
4.7 Health care industry
Share prices of health care industry were examined and tabulated (Refer table 4.7.1) to
forecasting the share prices for the first quarter of 2014. There were six listed quoted
companies namely Asiri Surgical, Asiri Hospitals Limited, Durdens, Lanka Hospitals,
Nawaloka Hospitals, and COL Pharmacy were identified and selected to represent the health
care industry over last ten years. Quarterly share prices were derived based on the average
daily share prices published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method, health
care industry average share price was continuously decreasing from the first quarter of 2011
to fourth quarter of 2013. (i.e. Rs. 604.30 to Rs. 107.47) (Refer table 4.7.1). Based on the
weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 111.23 which is below than the latest quarter share price of
Rs. 112.45 in the fourth quarter of 2013 (Refer figure 4.7.1 and 4.7.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.19 and mean percentage error was – 0.03 (Refer table 4.7.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, health care industry is
one of share price decline industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the health care industry. However, it was noted
that the share prices of individual companies as well as the industry as a whole have started to
decline from the first quarter of 2011 to fourth quarter of 2013 and thereafter forecasted that
the share prices of whole industry would further be declined (Refer figure 4.7.1 and 4.7.2).
When further analyzing of health care industry, I could noted that COL Pharmacy has
reported the highest share price Rs. 3,460.10 in first quarter of 2011 (Refer table 4.7.1). At
the end of fourth quarter of 2013, Rs. 465.10 (Refer figure 4.7.1 and 4.7.2) average share
price was reported as the highest company share prices of the health care industry. However,
when considering the each company separately in the health care industry all six companies’
share prices which ware forecasted for the first quarter of 2014, it was noted that the
forecasted share price going to be further declined except Asiri Hospitals Limited, Durdens,
Lanka Hospitals (i.e. these three companies’ forecasted share price going to be increased.)
which required to be taken the wise decisions by the investors who have invested and
potential investors of health care industry mainly the foreign investors.
37
Table 4.7.1
Health Care Industry
Year Quarter
Asiri
Surgical
Asiri
Hospitals
Limited Durdens
Lanka
Hospitals
Nawaloka
Hospitals
COLPha
rmacy
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 25.50 29.00 20.00 10.25 31.50 200.00 52.71
Q 2 24.75 32.00 24.00 10.75 42.50 169.00 50.50
Q 3 25.00 37.00 25.00 12.50 37.00 150.00 47.75
Q 4 25.00 36.00 23.00 12.75 3.25 175.00 45.83 49.57 (3.73) 3.73 -8% 8% 13.94
Q 1 35.00 37.00 27.25 15.50 7.00 199.00 53.46 47.34 6.12 6.12 11% 11% 37.41
Q 2 3.00 38.00 31.25 19.50 3.75 210.00 50.92 50.03 0.89 0.89 2% 2% 0.79
Q 3 3.25 48.00 42.75 27.00 3.75 200.00 54.13 50.66 3.46 3.46 6% 6% 11.99
Q 4 3.00 50.00 30.00 18.50 2.50 185.00 48.17 53.03 (4.86) 4.86 -10% 10% 23.64
Q 1 3.00 60.00 44.75 21.50 2.50 190.00 53.63 50.50 3.12 3.12 6% 6% 9.74
Q 2 4.00 62.00 39.00 21.00 2.30 195.00 53.88 52.09 1.80 1.80 3% 3% 3.23
Q 3 6.25 70.00 46.50 27.75 3.40 195.00 58.15 52.66 5.49 5.49 9% 9% 30.11
Q 4 8.00 88.50 55.25 26.50 3.00 200.00 63.54 55.97 7.58 7.58 12% 12% 57.41
Q 1 11.00 65.00 56.25 27.00 2.70 200.00 60.33 59.99 0.33 0.33 1% 1% 0.11
Q 2 8.25 56.00 51.00 22.25 2.30 165.00 50.80 60.86 (10.06) 10.06 -20% 20% 101.10
Q 3 10.00 72.50 54.50 23.50 2.60 175.25 56.39 56.21 0.19 0.19 0% 0% 0.03
Q 4 10.25 80.75 53.75 17.00 2.30 230.00 65.68 55.50 10.17 10.17 15% 15% 103.51
Q 1 7.50 58.25 58.00 16.00 2.70 236.00 63.08 59.92 3.16 3.16 5% 5% 9.99
Q 2 7.75 55.00 55.00 16.25 2.40 268.50 67.48 62.52 4.97 4.97 7% 7% 24.65
Q 3 7.00 50.50 56.00 16.25 2.40 225.25 59.57 65.80 (6.23) 6.23 -10% 10% 38.84
Q 4 5.75 49.25 44.75 12.00 1.80 225.50 56.51 62.64 (6.14) 6.14 -11% 11% 37.64
Q 1 6.75 55.00 53.00 14.75 1.70 225.00 59.37 59.62 (0.25) 0.25 0% 0% 0.06
Q 2 9.00 69.50 70.00 19.25 2.60 225.00 65.89 58.55 7.34 7.34 11% 11% 53.91
Q 3 10.00 68.00 80.25 20.25 3.20 300.00 80.28 62.06 18.23 18.23 23% 23% 332.18
Q 4 11.00 10.25 80.25 19.00 3.10 300.00 70.60 71.78 (1.18) 1.18 -2% 2% 1.40
Q 1 9.50 9.00 120.00 19.25 3.50 403.50 94.13 72.56 21.56 21.56 23% 23% 464.91
Q 2 9.25 9.00 109.25 22.50 7.50 400.00 92.92 84.30 8.62 8.62 9% 9% 74.26
Q 3 9.10 8.90 110.90 37.80 8.40 2,550.00 454.18 88.82 365.37 365.37 80% 80% 133,493.41
Q 4 8.70 8.80 102.00 31.70 3.70 1,825.00 329.98 273.79 56.19 56.19 17% 17% 3,157.50
Q 1 8.50 8.40 100.00 44.80 4.00 3,460.10 604.30 319.83 284.47 284.47 47% 47% 80,923.18
Q 2 7.90 8.20 97.10 39.90 4.00 2,295.00 408.68 491.98 (83.30) 83.30 -20% 20% 6,938.61
Q 3 8.30 9.90 91.90 63.00 4.10 1,700.00 312.87 451.63 (138.76) 138.76 -44% 44% 19,254.80
Q 4 7.90 8.60 85.00 52.10 3.90 1,190.00 224.58 399.90 (175.32) 175.32 -78% 78% 30,735.35
Q 1 7.90 7.60 72.50 32.60 3.10 768.00 148.62 287.89 (139.27) 139.27 -94% 94% 19,396.60
Q 2 7.30 7.70 80.50 30.60 3.00 602.50 121.93 204.26 (82.32) 82.32 -68% 68% 6,777.13
Q 3 8.40 11.50 90.00 50.60 3.40 625.20 131.52 150.47 (18.95) 18.95 -14% 14% 359.17
Q 4 9.20 11.10 91.10 39.30 3.00 489.00 107.12 132.06 (24.95) 24.95 -23% 23% 622.25
Q 1 9.30 11.40 100.00 35.00 2.90 460.10 103.12 117.40 (14.28) 14.28 -14% 14% 204.01
Q 2 10.30 14.10 105.00 40.00 3.10 548.40 120.15 110.00 10.15 10.15 8% 8% 103.09
Q 3 10.20 14.80 110.00 39.90 3.00 491.50 111.57 112.43 (0.87) 0.87 -1% 1% 0.75
Q 4 9.90 15.80 110.00 41.20 2.80 465.10 107.47 112.45 (4.99) 4.99 -5% 5% 24.85
2014 Q 1 111.23 (111.23) 111.23 12,372.85
Sum 4,861.75 4,718.29 (7.50) 1,645.89 -125% 720% 315,794.42
N 40 38 38 38 37 37 38
Mean Absolute Error 43.31
Mean Percentage Error (0.03)
Mean Absolute Percentage Error 0.19
Mean Squire Error 8,310.38
Root Mean Squire Error 91.16
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
38
Figure 4.7.1
-
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pric
e p
er S
ha
re
Healthcare Industry
Asiri Surgical
Asiri Hospitals Limited
Durdens
Lanka Hospitals
Nawaloka Hospitals
COLPharmacy
Industry Average QuarterPrice (Yt)
Forecasted Share Price
39
Figure 4.7.2
-
100.00
200.00
300.00
400.00
500.00
600.00
700.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Healthcare Industry
Industry AverageQuarter Price(Yt)
Forecasted SharePrice
40
4.8 Hotel industry
Share prices of hotel industry were examined and tabulated (Refer table 4.8.1) to forecasting
the share prices for the first quarter of 2014. There were fifteen listed quoted companies
namely Aitken Spence Hotel Holdings, Browns Beach, Beruwala Resorts Limited, Beruwela
Walkinn, Hikkaduwa Beach Resort Limited, Kalpitiya Beach Resort, Waskaduwa Beach
Resort, Galadari, Hotel Sigiriya, Kandy Hotels, John Keels Hotels, Lighthouse Hotel,
Serendib Hotels, TAJ Lanka, and Tangerine were identified and selected to represent the
hotel industry over last ten years. Quarterly share prices were derived based on the average
daily share prices published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method, hotel
industry average share price was continuously decreasing from the third quarter of 2010 to
fourth quarter of 2013. (I.e. Rs. 158.01 to Rs. 30.53) (Refer table 4.8.1). Based on the
weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 31.13 which is below than the latest quarter share price of Rs.
31.34 in the fourth quarter of 2013 (Refer figure 4.8.1 and 4.8.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.20 and mean percentage error was – 0.07 (Refer table 4.8.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, hotel industry is one of
share price decline industry which required taking the prudent decision whether to invest,
hold or divest the investment made in the hotel industry. However, it was noted that the share
prices of individual companies as well as the industry as a whole have started to decline from
the third quarter of 2010 to fourth quarter of 2013 and thereafter forecasted that the share
prices of whole industry would further be declined (Refer figure 4.8.1 and 4.8.2).
When further analyzing of hotel industry, I could noted that Aitken Spence Hotel Holdings
has reported the highest share price Rs. 729.10 in third quarter of 2010 (Refer table 4.8.1). At
the end of fourth quarter of 2013, Rs. 63.00 (Refer figure 4.8.1 and 4.8.2) average share price
was reported as the highest company share prices of the hotel industry. However, when
considering the each company separately in the hotel industry all fifteen companies’ share
prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted
share price going to be further declined except Browns Beach, Hikkaduwa Beach Resort
Limited, Waskaduwa Beach Resort, John Keels Hotels, Lighthouse Hotel, TAJ Lanka.
41
Table 4.8.1
Hotel Industry
Year Quarter
Aitken
Spence
Hotel
Holdings
Browns
Beach
Beruwal
a
Resorts
Limited
Beruwel
a
Walkinn
Hikkadu
wa
Beach
Resort
Limited
Kalpitiya
Beach
Resort
Waskad
uwa
Beach
Resort Galadari
Hotel
Sigiriya
Kandy
Hotels
John
Keels
Hotels
Lighthou
se Hotel
Serendib
Hotels
TAJ
Lanka
Tangerin
e
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 68.00 14.25 - 47.00 - - - 8.75 31.00 36.00 104.00 34.00 36.75 17.75 50.00 40.68
Q 2 73.00 14.50 - 52.00 - - - 8.75 42.00 35.00 98.00 36.00 50.00 16.00 55.00 43.66
Q 3 84.00 22.50 - 65.00 - - - 13.75 32.00 40.00 98.25 48.00 36.00 22.50 68.75 48.25
Q 4 91.00 31.25 - 70.00 - - - 16.00 38.00 38.75 87.00 48.00 42.00 19.50 52.00 48.50 45.36 3.14 3.14 6% 6% 9.87
Q 1 97.00 28.00 - 70.00 - - - 16.00 37.75 40.00 85.25 59.00 39.00 17.75 50.00 49.07 47.46 1.61 1.61 3% 3% 2.60
Q 2 93.00 23.00 - 69.00 - - - 15.00 40.00 39.50 83.75 60.00 40.00 18.00 60.00 49.20 48.73 0.47 0.47 1% 1% 0.22
Q 3 92.50 25.75 - 85.00 - - - 18.00 43.00 137.00 88.00 68.00 54.00 19.00 60.00 62.75 49.02 13.73 13.73 22% 22% 188.44
Q 4 68.00 23.00 - 57.00 - - - 11.25 33.00 73.00 85.00 60.00 45.00 12.00 34.00 45.57 55.95 (10.38) 10.38 -23% 23% 107.78
Q 1 85.00 35.25 - 70.00 - - - 12.75 37.00 78.50 81.00 59.00 47.75 14.25 52.75 52.11 51.45 0.66 0.66 1% 1% 0.44
Q 2 66.00 26.00 - 25.00 - - - 10.25 35.00 90.00 75.00 57.00 44.50 11.00 43.00 43.89 52.28 (8.39) 8.39 -19% 19% 70.41
Q 3 83.50 29.00 - 70.00 - - - 13.25 43.50 81.00 10.25 54.00 40.00 13.75 58.75 45.18 46.69 (1.51) 1.51 -3% 3% 2.28
Q 4 78.50 28.00 - 63.00 - - - 11.25 40.00 70.00 8.50 50.00 41.25 11.75 38.75 40.09 46.18 (6.09) 6.09 -15% 15% 37.07
Q 1 70.00 27.00 - 45.00 - - - 10.75 33.00 60.00 8.25 54.50 39.75 11.00 70.00 39.02 42.38 (3.35) 3.35 -9% 9% 11.25
Q 2 64.75 17.00 - 40.00 - - - 9.50 25.00 89.75 5.75 39.75 39.00 9.50 24.25 33.11 40.58 (7.46) 7.46 -23% 23% 55.67
Q 3 78.00 33.25 - 54.00 - - - 11.50 35.00 88.00 8.00 50.00 30.00 9.50 33.00 39.11 36.28 2.83 2.83 7% 7% 8.02
Q 4 67.75 31.75 - 62.00 - - - 9.50 35.00 85.00 7.00 48.00 27.00 8.00 29.50 37.32 37.30 0.02 0.02 0% 0% 0.00
Q 1 93.00 29.00 - 63.00 - - - 11.25 32.00 71.00 7.00 49.25 24.00 8.25 30.25 38.00 37.02 0.98 0.98 3% 3% 0.97
Q 2 87.25 26.00 - 78.50 - - - 11.25 24.00 66.50 6.75 39.75 23.50 8.00 25.00 36.05 38.02 (1.97) 1.97 -5% 5% 3.89
Q 3 116.25 29.25 - 63.00 - - - 9.25 26.25 73.25 7.00 47.75 40.25 10.00 31.00 41.20 36.89 4.32 4.32 10% 10% 18.65
Q 4 95.00 19.00 - 25.00 - - - 6.25 21.00 33.25 5.00 39.00 18.50 7.00 28.50 27.05 39.02 (11.97) 11.97 -44% 44% 143.29
Q 1 90.00 29.00 - 38.50 - - - 7.75 24.50 50.25 6.50 57.50 28.50 9.50 28.00 33.64 33.09 0.54 0.54 2% 2% 0.30
Q 2 145.00 41.25 - 59.00 - - - 12.50 44.00 92.00 12.25 70.00 47.00 16.75 45.50 53.20 33.17 20.03 20.03 38% 38% 401.27
Q 3 219.75 63.25 - 65.00 - - - 16.25 55.00 110.00 20.50 66.00 68.00 23.25 69.75 70.61 42.10 28.51 28.51 40% 40% 812.90
Q 4 269.25 66.00 - 62.50 - - - 15.00 53.75 113.25 22.50 70.00 66.25 23.25 65.25 75.18 58.00 17.19 17.19 23% 23% 295.37
Q 1 385.00 72.50 - 66.00 - - - 22.00 52.25 110.00 18.50 61.25 95.00 39.00 74.75 90.57 69.42 21.15 21.15 23% 23% 447.42
Q 2 415.00 84.00 - 70.00 - - - 29.00 68.00 142.00 18.75 63.50 119.75 46.50 95.00 104.68 81.96 22.72 22.72 22% 22% 516.22
Q 3 729.10 110.10 - 75.00 - - - 41.30 82.10 280.00 21.40 68.10 140.00 83.00 108.00 158.01 94.55 63.46 63.46 40% 40% 4,027.34
Q 4 105.70 78.00 - 130.00 - - - 35.80 79.40 230.00 20.00 63.00 119.70 71.70 95.70 93.55 128.52 (34.98) 34.98 -37% 37% 1,223.41
Q 1 98.00 21.30 - 112.00 - - - 32.40 76.10 237.80 17.20 56.00 160.10 60.00 97.70 88.05 115.11 (27.06) 27.06 -31% 31% 732.10
Q 2 75.70 18.30 - 180.00 - - - 36.80 73.90 235.00 16.10 55.00 22.80 51.40 87.00 77.45 103.69 (26.24) 26.24 -34% 34% 688.44
Q 3 71.60 17.60 - 185.00 - - - 32.40 71.40 235.00 15.40 51.10 30.10 46.10 86.20 76.54 83.85 (7.32) 7.32 -10% 10% 53.53
Q 4 69.50 17.00 - 145.10 - - - 29.10 74.00 266.30 13.50 53.50 28.80 39.00 81.00 74.25 79.12 (4.86) 4.86 -7% 7% 23.63
Q 1 70.00 14.60 3.00 115.00 - 9.00 9.50 19.50 71.60 7.10 12.60 50.00 24.80 30.90 2.50 31.44 75.58 (44.14) 44.14 -140% 140% 1,948.64
Q 2 65.00 13.90 3.00 58.70 - 6.40 8.80 13.70 70.20 6.00 12.00 48.50 20.50 25.50 89.00 31.51 53.30 (21.79) 21.79 -69% 69% 474.68
Q 3 76.50 28.00 3.00 84.00 - 9.00 8.30 16.90 85.00 10.90 14.50 48.50 26.70 35.80 72.00 37.08 40.04 (2.96) 2.96 -8% 8% 8.76
Q 4 72.70 18.10 2.60 74.60 23.80 7.00 6.70 14.20 80.00 9.60 13.70 45.00 23.60 29.80 80.00 33.43 34.28 (0.85) 0.85 -3% 3% 0.73
Q 1 73.20 17.20 2.00 52.20 18.00 5.50 5.30 12.10 79.60 8.60 13.20 47.40 23.70 25.00 65.40 29.89 34.14 (4.25) 4.25 -14% 14% 18.03
Q 2 74.00 19.00 2.20 70.10 25.50 7.10 6.80 12.70 78.20 9.20 13.40 46.00 26.60 29.40 65.00 32.35 32.39 (0.04) 0.04 0% 0% 0.00
Q 3 64.70 17.10 1.90 94.00 17.30 5.90 6.30 10.40 77.00 8.00 10.70 41.90 24.00 27.10 63.30 31.31 31.83 (0.52) 0.52 -2% 2% 0.27
Q 4 63.00 19.80 1.70 70.10 21.40 5.70 6.80 11.70 74.10 7.60 12.50 46.30 25.00 29.30 63.00 30.53 31.34 (0.80) 0.80 -3% 3% 0.64
2014 Q 1 31.13 (31.13) 31.13 968.95
Sum 2,113.09 2,037.19 (56.69) 459.44 -256% 740% 13,303.48
N 40 38 38 38 37 37 38
Mean Absolute Error 12.09
Mean Percentage Error (0.07)
Mean Absolute Percentage Error 0.20
Mean Squire Error 350.09
Root Mean Squire Error 18.71
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
42
Figure 4.8.1
-
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pri
ce p
er S
ha
re Hotel Industry
Aitken Spence Hotel Holdings
Browns Beach
Beruwala Resorts Limited
Beruwela Walkinn
Hikkaduwa Beach Resort Limited
Kalpitiya Beach Resort
Waskaduwa Beach Resort
Galadari
Hotel Sigiriya
Kandy Hotels
John Keels Hotels
Lighthouse Hotel
Serendib Hotels
TAJ Lanka
Tangerine
Industry Average Quarter Price (Yt)
Forecasted Share Price
43
Figure 4.8.2
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pri
ce p
er S
ha
re Hotel Industry
IndustryAverageQuarterPrice (Yt)
ForecastedShare Price
44
4.9 Insurance industry
Share prices of insurance industry were examined and tabulated (Refer table 4.9.1) to
forecasting the share prices for the first quarter of 2014. There were seven listed quoted
companies namely Asian Alliance, Amana Takaful Plc, Ceylinco, Eagle Insurance, HNB
Assurance, Janashakthi Insurance Company Limited, Union Assurance were identified and
selected to represent the insurance industry over last ten years. Quarterly share prices were
derived based on the average daily share prices published in the Colombo Stock Exchange
web site.
According to the selected forecasting technique of weighted moving average method,
insurance industry average share price was continuously increasing from the fourth quarter of
2012 to fourth quarter of 2013. (i.e. Rs. 197.54 to Rs. 266.33) (Refer table 4.9.1). Based on
the weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 255.84 which is above than the latest quarter share price of
Rs. 242.24 in the fourth quarter of 2013 (Refer figure 4.9.1 and 4.9.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.13 and mean percentage error was 0.05 (Refer table 4.9.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, insurance industry is one
of share price increasing industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the insurance industry. However, it was noted
that the share prices of individual companies as well as the industry as a whole have started to
increase during the period from the fourth quarter of 2012 to fourth quarter of 2013 and
thereafter forecasted that the share prices of whole industry would further be increased (Refer
figure 4.9.1 and 4.9.2).
When further analyzing of insurance industry, I could noted that Ceylinco Plc has reported
the highest share price Rs. 1,349.70 in fourth quarter of 2013 (Refer table 4.9.1). At the end
of fourth quarter of 2013, Rs. 1,349.70 (Refer figure 4.9.1 and 4.9.2) average share price was
reported as the highest company share prices of the insurance industry. However, when
considering the each company separately in the insurance industry all seven companies’ share
prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted
share price going to be further increased which required to be taken the wise decisions by the
investors who are existing in the insurance industry and potential investors who are going to
invest in the insurance industry in the future mainly including the foreign investors.
45
Table 4.9.1
Insurance Industry
Year Quarter
Asian
Alliance
Amana
Takaful
Plc Ceylinco
Eagle
Insurance
HNB
Assurance
Janashakthi
Insurance
Company
Limited
Union
Assurance
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 - - 35.00 109.00 10.00 - 45.00 49.75
Q 2 - - 32.00 120.00 12.25 - 52.00 54.06
Q 3 - - 42.00 120.00 12.50 - 52.50 56.75
Q 4 - - 40.00 110.00 12.50 - 45.00 51.88 54.54 (2.67) 2.67 -5% 5% 7.12
Q 1 - - 46.00 83.00 13.75 - 48.00 47.69 53.78 (6.09) 6.09 -13% 13% 37.06
Q 2 - - 56.50 81.00 16.50 - 47.00 50.25 50.76 (0.51) 0.51 -1% 1% 0.26
Q 3 - - 95.00 107.00 19.00 - 78.75 74.94 49.81 25.13 25.13 34% 34% 631.58
Q 4 - - 77.00 85.00 13.00 - 100.00 68.75 62.08 6.67 6.67 10% 10% 44.47
Q 1 - 61.75 145.00 135.00 19.00 - 107.00 93.55 66.91 26.64 26.64 28% 28% 709.89
Q 2 - 54.25 108.00 120.00 17.00 - 92.00 78.25 82.39 (4.14) 4.14 -5% 5% 17.12
Q 3 - 42.00 157.00 135.25 18.00 - 103.75 91.20 80.94 10.26 10.26 11% 11% 105.27
Q 4 - 39.00 170.00 135.50 24.75 - 102.50 94.35 87.79 6.57 6.57 7% 7% 43.10
Q 1 - 30.00 174.00 140.00 35.00 - 83.75 92.55 90.19 2.36 2.36 3% 3% 5.59
Q 2 - 29.00 180.00 136.00 21.25 - 44.00 82.05 92.82 (10.77) 10.77 -13% 13% 115.99
Q 3 - 15.50 180.00 140.25 24.00 - 42.00 80.35 87.66 (7.31) 7.31 -9% 9% 53.44
Q 4 - 14.50 185.00 150.75 24.50 - 46.25 84.20 83.30 0.90 0.90 1% 1% 0.81
Q 1 - 13.50 214.75 138.00 24.00 11.50 57.00 76.46 82.62 (6.16) 6.16 -8% 8% 37.90
Q 2 - 11.25 225.25 135.00 23.00 10.50 70.25 79.21 79.56 (0.35) 0.35 0% 0% 0.12
Q 3 - 11.00 218.00 130.00 22.75 9.75 71.25 77.13 79.38 (2.26) 2.26 -3% 3% 5.09
Q 4 - 6.00 187.00 115.00 18.25 5.75 49.75 63.63 77.62 (13.99) 13.99 -22% 22% 195.77
Q 1 - 7.50 140.00 110.75 20.25 7.75 70.25 59.42 70.79 (11.38) 11.38 -19% 19% 129.39
Q 2 - 10.75 175.00 145.00 31.00 7.75 73.00 73.75 64.22 9.53 9.53 13% 13% 90.81
Q 3 - 10.50 240.00 170.00 47.25 10.25 89.00 94.50 67.43 27.08 27.08 29% 29% 733.06
Q 4 - 12.50 220.00 178.00 49.50 9.50 90.75 93.38 81.26 12.12 12.12 13% 13% 146.81
Q 1 - 16.00 231.00 206.00 55.50 14.00 104.00 104.42 89.79 14.63 14.63 14% 14% 214.01
Q 2 - 3.00 270.00 218.50 68.00 15.00 115.50 115.00 99.12 15.88 15.88 14% 14% 252.15
Q 3 72.00 3.20 440.40 305.00 80.60 17.00 160.00 154.03 107.50 46.53 46.53 30% 30% 2,164.91
Q 4 80.20 3.00 381.00 280.00 78.00 16.00 122.10 137.19 132.40 4.79 4.79 3% 3% 22.93
Q 1 157.00 2.10 730.00 299.10 80.00 16.50 169.70 207.77 137.80 69.97 69.97 34% 34% 4,895.80
Q 2 136.50 2.40 700.00 275.10 60.20 16.30 106.70 185.31 175.85 9.47 9.47 5% 5% 89.63
Q 3 358.50 2.70 774.60 280.00 61.50 15.70 115.50 229.79 182.43 47.36 47.36 21% 21% 2,242.97
Q 4 166.70 2.40 746.60 247.40 56.90 15.00 108.10 191.87 212.04 (20.17) 20.17 -11% 11% 406.83
Q 1 86.20 1.90 812.40 200.20 45.80 11.60 90.40 178.36 201.93 (23.58) 23.58 -13% 13% 555.88
Q 2 86.30 1.60 801.50 152.90 42.20 10.00 85.10 168.51 192.70 (24.18) 24.18 -14% 14% 584.81
Q 3 94.60 1.70 820.60 374.70 52.40 11.20 106.00 208.74 176.14 32.60 32.60 16% 16% 1,063.04
Q 4 89.00 1.70 816.80 329.90 50.80 10.70 83.90 197.54 190.60 6.95 6.95 4% 4% 48.24
Q 1 90.00 1.70 999.90 350.00 47.80 12.30 85.70 226.77 195.10 31.67 31.67 14% 14% 1,003.26
Q 2 80.00 1.60 1,041.00 301.10 51.90 13.50 99.50 226.94 214.40 12.55 12.55 6% 6% 157.39
Q 3 103.50 1.60 1,254.40 273.50 50.10 13.20 107.00 257.61 221.01 36.60 36.60 14% 14% 1,339.77
Q 4 80.40 1.40 1,349.70 265.40 51.20 12.20 104.00 266.33 242.24 24.08 24.08 9% 9% 580.05
2014 Q 1 255.84 (255.84) 255.84 65,452.64
Sum 4,824.21 4,572.69 90.96 869.71 194% 468% 84,184.96
N 40 38 38 38 37 37 38
Mean Absolute Error 22.89
Mean Percentage Error 0.05
Mean Absolute Percentage Error 0.13
Mean Squire Error 2,215.39
Root Mean Squire Error 47.07
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
46
Figure 4.9.1
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pric
e p
er S
ha
re
Insurance Industry
Asian Alliance
Amana Takaful Plc
Ceylinco
Eagle Insurance
HNB Assurance
Janashakthi InsuranceCompany Limited
Union Assurance
Industry Average QuarterPrice (Yt)
Forecasted Share Price
47
Figure 4.9.2
-
50.00
100.00
150.00
200.00
250.00
300.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Insurance Industry
IndustryAverageQuarter Price(Yt)
ForecastedShare Price
48
4.10 Manufacturing industry
Share prices of manufacturing industry were examined and tabulated (Refer table 4.10.1) to
forecasting the share prices for the first quarter of 2014. There were twenty two listed quoted
companies mainly including namely Abans, Lanka Ashok, Browns, Printcare, Lanka
Ceramic, DIMO, Dankotuwa Porcel, Ceylon Glass Co., Kalani Kebles, Laugfs Gas Ltd,
Caltex, Royal Ceramics, Singer Sri Lanka, Tokyo Cement, Kelani Tyres, and United Motors
were identified and selected to represent the manufacturing industry over last ten years.
Quarterly share prices were derived based on the average daily share prices published in the
Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
manufacturing industry average share price was continuously decreasing from the second
quarter of 2011 to fourth quarter of 2013. (I.e. Rs. 469.77 to Rs. 170.78) (Refer table 4.10.1).
Based on the weighted moving average forecasting method, the forecasted share prices for
the first quarter of 2014 would be Rs. 178.22 which is below than the latest quarter share
price of Rs. 184.08 in the fourth quarter of 2013 (Refer figure 4.10.1 and 4.10.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.20 and mean percentage error was 0.00 (Refer table 4.10.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, manufacturing industry
is one of share price decline industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the manufacturing industry. However, it was
noted that the share prices of individual companies as well as the industry as a whole have
started to decline from the second quarter of 2011 to fourth quarter of 2013 and thereafter
forecasted that the share prices of whole industry would further be declined (Refer figure
4.10.1 and 4.10.2).
When further analyzing of manufacturing industry, I could noted that Lanka Ashok has
reported the highest share price Rs. 5,918.00 in second quarter of 2011 (Refer table 4.10.1).
At the end of fourth quarter of 2013, Rs. 1,475.00 (Refer figure 4.10.1 and 4.10.2) average
share price was reported as the highest company share prices of the manufacturing industry.
However, when considering the each company separately in the manufacturing industry all
twenty two companies’ share prices which ware forecasted for the first quarter of 2014, it was
noted that the forecasted share price going to be further declined.
49
Table 4.10.1
Manufacturing Industry
Year Quarter Abans
Acl
Cables
Limited
Associat
ed
Motor
Finance
Co. Ltd
Asha
Central
Lanka
Ashok Browns
Printcar
e
Lanka
Ceramic DIMO
Dankotu
wa
Porcel
Ceylon
Glass
Co.
Kalani
Kebles
Lanka
Aluminiu
m
Lanka
Cement
Laugfs
Gas
Limited Caltex
Royal
Ceramics
Singer
Sri
Lanka
Lanka
Tiles
Tokyo
Cement
Kelani
Tyres
United
Motors
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 59.75 32.75 - 13.50 60.00 150.00 65.00 16.75 53.00 15.75 27.00 130.00 14.00 7.00 - 76.00 17.00 80.00 40.00 127.00 6.25 28.00 50.94
Q 2 95.00 43.50 - 13.75 75.00 270.00 63.25 20.50 74.50 14.75 40.25 134.75 16.00 9.00 - 84.25 16.50 73.00 43.00 130.00 7.50 28.50 62.65
Q 3 121.00 58.50 - 17.25 90.00 260.00 70.00 19.00 63.50 15.25 43.00 135.00 15.00 8.25 - 69.50 31.50 73.75 48.50 145.00 9.00 32.75 66.29
Q 4 85.00 63.00 - 15.25 90.00 250.00 90.50 20.25 64.00 15.75 55.00 125.00 16.50 7.75 - 63.75 3.00 71.75 59.50 140.00 9.75 27.00 63.64 62.13 1.51 1.51 2% 2% 2.28
Q 1 90.00 89.50 - 27.00 108.00 260.00 109.00 24.50 104.50 20.75 48.00 145.00 24.00 10.00 - 64.00 4.50 84.75 65.00 180.00 10.75 51.00 76.01 64.24 11.78 11.78 15% 15% 138.71
Q 2 90.00 90.00 - 24.50 195.00 252.00 110.00 29.50 119.00 21.00 34.50 92.00 19.75 9.25 - 59.50 3.75 65.25 65.00 186.00 10.25 45.00 76.06 70.36 5.71 5.71 8% 8% 32.58
Q 3 120.00 115.00 - 38.00 290.00 470.00 74.75 43.50 143.00 21.00 3.25 130.00 19.75 9.00 - 68.00 4.25 75.50 69.75 195.00 14.25 73.00 98.85 73.56 25.29 25.29 26% 26% 639.46
Q 4 109.00 93.00 - 23.75 310.00 460.25 38.00 31.00 108.00 15.00 2.25 90.00 12.00 6.00 - 58.00 3.00 63.50 60.00 165.00 9.25 53.50 85.53 87.45 (1.92) 1.92 -2% 2% 3.69
Q 1 120.00 124.00 - 38.00 252.00 530.00 55.00 34.50 138.50 14.25 2.50 100.00 29.00 6.50 - 67.00 3.40 84.00 67.75 185.00 13.75 81.50 97.33 87.63 9.70 9.70 10% 10% 94.14
Q 2 105.00 108.00 - 37.00 219.00 538.00 52.00 25.00 140.00 9.25 1.80 83.50 27.50 6.00 - 69.00 2.70 55.25 58.50 174.00 10.75 69.00 89.56 94.09 (4.53) 4.53 -5% 5% 20.53
Q 3 112.00 131.50 - 44.00 249.00 590.00 55.00 33.25 133.00 11.50 2.20 95.00 28.75 6.25 - 83.00 3.70 72.75 64.00 183.00 15.50 75.50 99.45 91.09 8.36 8.36 8% 8% 69.87
Q 4 101.00 213.75 - 41.50 185.25 919.00 59.50 36.00 108.50 10.00 2.50 91.75 28.75 8.75 - 85.50 3.50 74.25 65.00 194.75 16.50 72.00 115.89 96.06 19.83 19.83 17% 17% 393.22
Q 1 91.50 144.00 - 40.00 170.00 630.00 53.00 39.00 120.00 9.00 2.50 85.25 29.75 8.50 - 85.25 35.00 75.00 49.00 250.00 23.00 80.00 100.99 105.69 (4.70) 4.70 -5% 5% 22.11
Q 2 75.25 134.00 - 37.50 190.00 610.00 55.00 37.00 100.00 10.25 2.50 80.50 30.00 7.50 - 82.00 30.00 70.00 54.75 252.00 21.00 68.00 97.36 105.15 (7.79) 7.79 -8% 8% 60.63
Q 3 82.00 112.00 - 95.75 300.00 650.00 60.25 35.00 90.00 16.00 2.60 78.00 31.00 8.75 - 82.50 30.50 65.00 60.75 256.00 21.50 60.25 106.89 102.16 4.74 4.74 4% 4% 22.44
Q 4 93.50 94.50 - 83.25 210.00 900.00 50.00 34.50 78.00 15.00 2.00 96.00 30.75 7.25 - 85.25 32.00 68.00 55.75 239.50 20.00 54.25 112.48 102.85 9.62 9.62 9% 9% 92.59
Q 1 81.75 46.00 - 75.00 360.00 925.50 63.00 56.00 88.75 17.00 2.00 90.00 32.00 14.25 - 98.00 42.50 57.25 63.50 251.25 24.00 53.75 122.08 107.78 14.30 14.30 12% 12% 204.41
Q 2 75.50 37.50 - 58.00 240.00 950.00 59.50 55.00 111.25 9.50 2.30 94.75 29.00 10.50 - 100.25 45.00 50.50 65.00 220.00 56.50 54.50 116.23 116.16 0.07 0.07 0% 0% 0.00
Q 3 90.00 38.25 - 65.00 429.50 33.75 55.00 40.75 90.00 8.50 2.10 80.00 27.50 11.00 - 112.50 42.50 54.50 61.00 195.50 47.75 73.75 77.94 117.23 (39.29) 39.29 -50% 50% 1,543.61
Q 4 50.00 30.00 - 50.00 249.50 19.00 52.25 31.50 62.00 5.25 1.30 60.00 18.00 6.25 - 92.00 28.00 32.00 25.00 192.00 22.00 33.25 52.97 98.25 (45.29) 45.29 -86% 86% 2,051.14
Q 1 64.00 24.25 - 60.25 355.00 18.00 50.25 29.75 60.25 5.00 1.30 92.00 22.50 11.00 - 105.50 27.50 32.25 28.50 125.00 24.25 33.50 58.50 73.11 (14.61) 14.61 -25% 25% 213.40
Q 2 72.00 48.00 - 92.50 336.00 34.50 60.00 37.75 101.00 9.00 1.80 92.75 29.75 23.00 - 122.00 42.25 48.00 44.00 158.00 43.25 59.25 72.74 60.73 12.01 12.01 17% 17% 144.26
Q 3 80.00 66.25 - 83.00 425.00 60.00 66.00 54.00 110.25 8.75 1.80 152.00 28.25 30.25 - 153.00 48.50 66.00 56.50 192.00 45.25 62.00 89.44 64.51 24.93 24.93 28% 28% 621.32
Q 4 100.00 76.75 - 106.75 1,345.00 74.50 67.25 49.00 180.00 11.25 2.20 153.00 28.00 23.25 - 141.75 66.50 76.50 66.50 322.25 67.25 64.25 151.10 78.24 72.86 72.86 48% 48% 5,307.85
Q 1 144.75 75.00 - 109.25 1,075.00 87.75 85.00 66.75 424.75 10.50 2.20 194.50 27.25 27.50 25.40 170.00 113.00 74.00 87.75 28.00 63.50 90.00 141.99 116.93 25.06 25.06 18% 18% 628.21
Q 2 180.50 94.00 - 140.00 1,900.00 109.50 74.00 86.00 620.00 38.00 2.60 239.00 40.00 27.75 24.10 163.25 159.75 117.50 103.75 32.00 78.00 125.00 207.37 134.21 73.15 73.15 35% 35% 5,351.36
Q 3 260.10 99.00 - 170.00 4,000.00 196.60 120.00 97.90 890.00 70.20 4.10 206.50 39.00 27.60 26.50 170.10 314.80 228.30 109.60 51.60 119.20 232.40 353.98 176.50 177.48 177.48 50% 50% 31,497.55
Q 4 260.00 85.10 - 153.80 4,050.00 246.90 117.10 111.70 973.50 61.40 7.80 204.50 35.70 28.00 25.90 159.50 304.90 195.00 134.30 55.00 49.30 115.70 351.20 267.60 83.60 83.60 24% 24% 6,988.72
Q 1 258.10 94.00 465.80 175.00 2,650.00 289.80 127.60 146.40 1,484.70 59.90 11.10 185.20 56.60 24.90 44.40 160.00 157.00 224.20 131.10 60.80 52.60 152.20 318.70 323.26 (4.56) 4.56 -1% 1% 20.83
Q 2 271.40 80.20 605.00 215.30 5,918.00 312.10 218.70 117.00 1,438.50 48.50 8.80 205.00 57.90 22.30 41.40 157.10 155.10 116.10 109.20 55.30 47.00 135.00 469.77 335.50 134.26 134.26 29% 29% 18,026.92
Q 3 246.00 77.00 500.50 196.00 3,500.00 275.10 40.60 106.20 1,350.00 35.20 8.40 86.20 52.30 24.00 40.70 163.70 132.50 134.20 100.40 50.00 44.50 155.40 332.68 400.73 (68.06) 68.06 -20% 20% 4,631.60
Q 4 190.10 74.00 300.50 199.90 2,925.00 234.80 36.90 85.00 1,302.10 33.80 7.90 75.00 44.00 19.80 38.00 170.00 141.50 132.70 80.30 44.00 38.50 146.00 287.26 371.01 (83.75) 83.75 -29% 29% 7,013.30
Q 1 158.00 62.60 410.00 165.00 2,069.00 155.10 31.00 70.00 982.20 16.30 6.10 66.20 25.20 11.00 25.80 181.90 115.00 101.00 65.10 37.00 26.50 108.00 222.18 337.39 (115.21) 115.21 -52% 52% 13,272.61
Q 2 98.50 55.30 308.20 230.00 1,915.00 110.00 30.50 63.00 581.70 12.30 5.10 59.40 19.70 8.00 20.50 168.00 91.00 97.70 63.00 29.90 27.20 69.90 184.72 263.81 (79.08) 79.08 -43% 43% 6,254.08
Q 3 110.70 75.00 439.50 259.00 2,071.90 165.80 34.00 71.40 771.90 20.30 6.50 70.50 38.00 12.10 29.60 192.00 103.00 112.50 74.00 29.00 39.50 100.00 219.37 216.47 2.90 2.90 1% 1% 8.43
Q 4 96.50 65.00 336.00 220.00 1,750.00 124.20 29.20 59.30 605.00 16.10 6.00 64.50 33.70 9.30 25.70 202.40 94.00 102.00 64.90 28.00 34.50 96.30 184.66 209.54 (24.88) 24.88 -13% 13% 618.81
Q 1 89.60 65.50 350.10 250.00 1,710.00 118.00 28.00 65.00 505.00 13.80 6.10 61.30 26.70 8.40 24.50 217.00 99.50 99.50 69.50 23.50 34.50 96.00 180.07 195.09 (15.02) 15.02 -8% 8% 225.60
Q 2 135.00 68.00 385.00 267.00 1,800.00 117.40 28.10 120.00 530.00 14.40 6.60 83.80 30.60 9.00 25.70 296.00 104.00 98.00 79.90 25.00 46.00 118.00 199.43 189.31 10.12 10.12 5% 5% 102.50
Q 3 102.50 65.20 362.10 260.00 1,500.00 95.00 28.30 119.90 499.70 13.00 5.20 75.00 27.60 7.00 26.50 270.00 87.00 98.20 68.10 23.30 41.90 107.10 176.48 190.67 (14.19) 14.19 -8% 8% 201.28
Q 4 103.10 65.00 301.10 262.70 1,475.00 81.00 28.00 114.50 482.10 13.20 4.20 68.30 29.10 6.30 28.70 265.20 83.80 85.50 73.00 27.20 50.10 110.00 170.78 184.08 (13.31) 13.31 -8% 8% 177.07
2014 Q 1 178.22 (178.22) 178.22 31,762.21
Sum 6,141.54 5,948.78 12.88 1,441.67 1% 730% 138,459.33
N 40 38 38 38 37 37 38
Mean Absolute Error 37.94
Mean Percentage Error 0.00
Mean Absolute Percentage Error 0.20
Mean Squire Error 3,643.67
Root Mean Squire Error 60.36
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
50
Figure 4.10.1
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Manufacturing Industry Abans
Acl Cables Limited
Associated Motor Finance Co. Ltd
Asha Central
Lanka Ashok
Browns
Printcare
Lanka Ceramic
DIMO
Dankotuwa Porcel
Ceylon Glass Co.
Kalani Kebles
Lanka Aluminium
Lanka Cement
Laugfs Gas Limited
Caltex
Royal Ceramics
Singer Sri Lanka
Lanka Tiles
Tokyo Cement
Kelani Tyres
United Motors
Industry Average Quarter Price (Yt)
Forecasted Share Price
51
Figure 4.10.2
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
500.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Manufacturing Industry
IndustryAverageQuarterPrice (Yt)
ForecastedShare Price
52
4.11 Plantation industry
Share prices of plantation industry were examined and tabulated (Refer table 4.11.1) to
forecasting the share prices for the first quarter of 2014. There were eight listed quoted
companies namely Agalawatte Plantation Limited, Balangoda Plantations, Bairaha Farms,
Bogawantalawa, Kegalle Plantations, Kotagala Plantations, Talawakelle Tea Estates, and
Watawala Plantations were identified and selected to represent the plantation industry over
last ten years. Quarterly share prices were derived based on the average daily share prices
published in the Colombo Stock Exchange web site.
According to the selected forecasting technique of weighted moving average method,
plantation industry average share price was continuously decreasing from the first quarter of
2011 to fourth quarter of 2013. (I.e. Rs. 127.01 to Rs. 44.54) (Refer table 4.11.1). Based on
the weighted moving average forecasting method, the forecasted share prices for the first
quarter of 2014 would be Rs. 45.51 which is below than the latest quarter share price of Rs.
47.88 in the fourth quarter of 2013 (Refer figure 4.11.1 and 4.11.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.23 and mean percentage error was 0.00 (Refer table 4.11.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, plantation industry is
one of share price decline industry which required taking the prudent decision whether to
invest, hold or divest the investment made in the plantation industry. However, it was noted
that the share prices of individual companies as well as the industry as a whole have started to
decline from the first quarter of 2011 to fourth quarter of 2013 and thereafter forecasted that
the share prices of whole industry would further be declined (Refer figure 4.11.1 and 4.11.2).
When further analyzing of plantation industry, I could noted that Bairaha Farms has reported
the highest share price Rs. 401.00 in first quarter of 2011 (Refer table 4.11.1). At the end of
fourth quarter of 2013, Rs. 130.50 (Refer figure 4.11.1 and 4.11.2) average share price was
reported as the highest company share prices of the plantation industry. However, when
considering the each company separately in the plantation industry all eight companies’ share
prices which ware forecasted for the first quarter of 2014, it was noted that the forecasted
share price going to be further declined except Balangoda Plantations, Kegalle Plantations,
Kotagala Plantations, and Talawakelle Tea Estates (i.e. these four companies’ forecasted
share price going to be increased.) which required to be taken wise decisions by the investors
who are existing and potential investors of plantation industry mainly the foreign investors.
53
Table 4.11.1
Plantation Industry
Year Quarter
Agalawatte
Plantation
Limited
Balangoda
Plantations
Bairaha
Farms
Bogawan
talawa
Kegalle
Plantations
Kotagala
Plantations
Talawak
elle Tea
Estates
Watawala
Plantations
Industry
Average
Quarter
Price (Yt)
Forecasted
Share Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
%
(Yt - Y^t)
^2
Q 1 11.75 12.00 16.00 11.25 13.25 6.50 14.25 8.00 11.63
Q 2 14.00 13.50 17.00 12.50 17.00 6.75 14.50 10.50 13.22
Q 3 12.75 16.50 16.25 16.00 17.00 9.00 17.75 12.25 14.69
Q 4 10.00 16.50 14.50 15.00 17.50 7.75 16.00 12.00 13.66 13.63 0.02 0.02 0% 0% 0.00
Q 1 12.75 17.00 15.75 16.00 22.00 8.25 17.50 18.50 15.97 13.88 2.09 2.09 13% 13% 4.37
Q 2 13.00 17.75 14.50 15.00 25.00 13.75 20.75 27.00 18.34 15.02 3.33 3.33 18% 18% 11.06
Q 3 17.00 15.75 20.50 16.00 31.00 16.00 24.50 29.75 21.31 16.69 4.62 4.62 22% 22% 21.33
Q 4 9.75 12.00 15.00 16.00 21.00 11.00 17.00 22.75 15.56 19.35 (3.79) 3.79 -24% 24% 14.37
Q 1 16.50 18.25 16.00 16.00 40.00 17.00 29.25 40.00 24.13 17.84 6.28 6.28 26% 26% 39.45
Q 2 26.50 16.00 10.25 17.75 47.75 23.00 25.50 42.50 26.16 20.99 5.16 5.16 20% 20% 26.65
Q 3 24.00 17.50 11.00 16.25 47.00 29.75 25.50 58.75 28.72 23.43 5.29 5.29 18% 18% 27.99
Q 4 20.75 16.50 10.25 13.50 44.50 27.25 26.75 64.00 27.94 27.03 0.91 0.91 3% 3% 0.82
Q 1 21.00 13.75 9.25 13.50 42.00 28.50 21.75 55.00 25.59 27.82 (2.22) 2.22 -9% 9% 4.94
Q 2 25.00 15.75 9.00 15.25 49.00 34.75 20.00 64.00 29.09 26.92 2.17 2.17 7% 7% 4.72
Q 3 24.00 15.00 10.50 14.75 42.00 28.00 20.25 59.00 26.69 27.81 (1.13) 1.13 -4% 4% 1.27
Q 4 35.25 27.00 14.25 23.00 54.00 46.75 35.75 83.50 39.94 27.19 12.75 12.75 32% 32% 162.48
Q 1 38.25 35.00 17.00 30.75 60.00 67.50 37.00 86.00 46.44 33.79 12.64 12.64 27% 27% 159.86
Q 2 34.50 28.75 14.75 26.00 61.50 53.25 34.25 75.00 41.00 40.54 0.46 0.46 1% 1% 0.21
Q 3 28.00 29.00 13.75 23.00 50.00 40.00 32.75 77.25 36.72 42.42 (5.70) 5.70 -16% 16% 32.49
Q 4 11.00 12.00 8.00 11.00 28.00 17.00 13.00 57.50 19.69 39.95 (20.26) 20.26 -103% 103% 410.44
Q 1 16.00 13.50 8.75 12.50 19.00 16.00 14.00 58.50 19.78 29.06 (9.28) 9.28 -47% 47% 86.08
Q 2 23.00 23.00 14.00 30.25 34.50 30.50 27.00 70.00 31.53 23.14 8.39 8.39 27% 27% 70.40
Q 3 23.50 23.25 17.25 43.75 34.75 31.50 27.75 73.25 34.38 25.64 8.74 8.74 25% 25% 76.34
Q 4 21.75 24.00 24.50 37.50 33.50 30.00 25.25 90.00 35.81 30.60 5.21 5.21 15% 15% 27.14
Q 1 27.25 29.00 34.00 36.50 47.00 44.75 31.00 176.00 53.19 34.53 18.66 18.66 35% 35% 348.29
Q 2 37.25 38.00 70.00 43.50 80.75 68.25 39.50 220.25 74.69 44.21 30.48 30.48 41% 41% 928.73
Q 3 46.30 67.10 198.00 54.20 159.80 94.70 50.00 38.00 88.51 60.46 28.05 28.05 32% 32% 786.80
Q 4 63.00 57.40 198.30 20.40 161.80 116.90 46.40 27.90 86.51 77.30 9.21 9.21 11% 11% 84.87
Q 1 93.30 56.10 401.00 19.80 207.50 168.00 45.40 25.00 127.01 84.75 42.27 42.27 33% 33% 1,786.33
Q 2 70.10 50.60 323.10 19.00 183.10 139.70 38.00 22.70 105.79 107.16 (1.38) 1.38 -1% 1% 1.89
Q 3 51.10 36.30 253.40 16.40 145.00 92.00 32.50 18.00 80.59 108.30 (27.71) 27.71 -34% 34% 767.98
Q 4 49.80 28.80 210.30 14.20 105.00 64.30 29.70 14.20 64.54 97.43 (32.90) 32.90 -51% 51% 1,082.08
Q 1 39.00 24.90 130.00 10.50 103.00 70.00 23.70 10.00 51.39 77.60 (26.22) 26.22 -51% 51% 687.23
Q 2 30.00 22.60 123.10 7.50 91.00 55.40 18.30 8.30 44.53 61.17 (16.65) 16.65 -37% 37% 277.14
Q 3 39.50 39.90 181.00 13.60 113.20 81.00 33.00 12.80 64.25 50.59 13.66 13.66 21% 21% 186.70
Q 4 32.60 38.00 150.10 12.10 104.00 73.80 24.00 12.00 55.83 55.76 0.06 0.06 0% 0% 0.00
Q 1 33.90 33.60 149.70 11.50 112.00 54.00 26.20 11.20 54.01 56.09 (2.08) 2.08 -4% 4% 4.33
Q 2 27.30 28.50 139.90 12.00 103.10 51.60 23.10 12.40 49.74 56.60 (6.87) 6.87 -14% 14% 47.15
Q 3 22.90 27.50 130.00 10.60 93.10 40.00 19.90 10.50 44.31 52.24 (7.93) 7.93 -18% 18% 62.81
Q 4 22.10 29.00 130.50 9.10 96.00 36.40 23.60 9.60 44.54 47.88 (3.34) 3.34 -8% 8% 11.17
2014 Q 1 45.51 (45.51) 45.51 2,071.16
Sum 1,707.38 1,660.34 7.51 433.40 7% 848% 10,317.08
N 40 38 38 38 37 37 38
Mean Absolute Error 11.41
Mean Percentage Error 0.00
Mean Absolute Percentage Error 0.23
Mean Squire Error 271.50
Root Mean Squire Error 16.48
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
54
Figure 4.11.1
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Plantation Industry
Agalawatte PlantationLimited
Balangoda Plantations
Bairaha Farms
Bogawantalawa
Kegalle Plantations
Kotagala Plantations
Talawakelle TeaEstates
Watawala Plantations
Industry AverageQuarter Price (Yt)
Forecasted SharePrice
55
Figure 4.11.2
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Plantation Industry
IndustryAverageQuarterPrice (Yt)
Forecasted SharePrice
56
4.12 Telecommunication industry
Share prices of telecommunication industry were examined and tabulated (Refer table 4.12.1)
to forecasting the share prices for the first quarter of 2014. There were two listed quoted
companies namely Dialog Telecom and Sri Lanka Telecom were identified and selected to
represent the telecommunication industry over last ten years. Quarterly share prices were
derived based on the average daily share prices published in the Colombo Stock Exchange
web site.
According to the selected forecasting technique of weighted moving average method,
telecommunication industry average share price was continuously decreasing from the fourth
quarter of 2010 to fourth quarter of 2013. (I.e. Rs. 30.55 to Rs. 23.95) (Refer table 4.12.1).
Based on the weighted moving average forecasting method, the forecasted share prices for
the first quarter of 2014 would be Rs. 23.79 which is below than the latest quarter share
price of Rs. 23.76 in the fourth quarter of 2013 (Refer figure 4.12.1 and 4.12.2).
Based on the forecasting technique, mean absolute percentage error was almost equal to zero
i.e. 0.10 and mean percentage error was 0.00 (Refer table 4.12.1) which indicates the high
accuracy level of forecasting technique. Therefore, as industry wise, telecommunication
industry is one of share price decline industry which required taking the prudent decision
whether to invest, hold or divest the investment made in the telecommunication industry.
However, it was noted that the share prices of individual companies as well as the industry as
a whole have started to decline from the fourth quarter of 2010 to fourth quarter of 2013 and
thereafter forecasted that the share prices of whole industry would further be declined (Refer
figure 4.12.1 and 4.12.2).
When further analyzing of telecommunication industry, I could noted that Sri Lanka Telecom
has reported the highest share price Rs. 57.00 in fourth quarter of 2010 (Refer table 4.12.1).
At the end of fourth quarter of 2013, Rs. 39.00 (Refer figure 4.12.1 and 4.12.2) average share
price was reported as the highest company share prices of the telecommunication industry.
However, when considering the each company separately in the telecommunication industry
all two companies’ share prices which ware forecasted for the first quarter of 2014, it was
noted that the forecasted share price going to be further declined which required to be taken
the wise decisions by the investors who have invested and potential investors.
57
Table 4.12.1
Telecommunication Industry
Year Quarter
Dialog
Telekom
Sri
Lanka
Telecom
Industry
Average
Quarter
Price (Yt)
Forecaste
d Share
Price Yt - Y^t Absolute
(Yt -
Y^t) /
Actual
%
Absolute
% (Yt - Y^t) ^2
Q 1 15.50 18.50 17.00
Q 2 16.75 16.75 16.75
Q 3 19.75 18.50 19.13
Q 4 16.50 15.75 16.13 17.99 (1.86) 1.86 -12% 12% 3.47
Q 1 20.00 16.25 18.13 17.15 0.97 0.97 5% 5% 0.95
Q 2 19.75 22.00 20.88 17.73 3.15 3.15 15% 15% 9.92
Q 3 21.75 24.50 23.13 19.10 4.03 4.03 17% 17% 16.20
Q 4 27.00 16.50 21.75 21.45 0.30 0.30 1% 1% 0.09
Q 1 25.50 18.00 21.75 21.99 (0.24) 0.24 -1% 1% 0.06
Q 2 23.50 18.00 20.75 22.03 (1.28) 1.28 -6% 6% 1.63
Q 3 23.00 21.00 22.00 21.25 0.75 0.75 3% 3% 0.56
Q 4 20.00 27.50 23.75 21.58 2.18 2.18 9% 9% 4.73
Q 1 16.75 37.25 27.00 22.63 4.38 4.38 16% 16% 19.14
Q 2 14.25 36.50 25.38 25.03 0.35 0.35 1% 1% 0.12
Q 3 8.00 33.25 20.63 25.54 (4.91) 4.91 -24% 24% 24.13
Q 4 6.00 31.50 18.75 23.33 (4.58) 4.58 -24% 24% 20.93
Q 1 4.90 41.25 23.08 20.64 2.44 2.44 11% 11% 5.94
Q 2 5.25 45.25 25.25 21.29 3.96 3.96 16% 16% 15.70
Q 3 6.50 41.50 24.00 23.30 0.70 0.70 3% 3% 0.49
Q 4 7.25 31.00 19.13 24.19 (5.07) 5.07 -26% 26% 25.65
Q 1 6.75 33.50 20.13 21.81 (1.69) 1.69 -8% 8% 2.85
Q 2 9.75 48.75 29.25 20.60 8.65 8.65 30% 30% 74.82
Q 3 12.40 44.75 28.58 24.49 4.09 4.09 14% 14% 16.71
Q 4 11.80 36.25 24.03 27.09 (3.06) 3.06 -13% 13% 9.38
Q 1 10.50 37.00 23.75 26.44 (2.69) 2.69 -11% 11% 7.21
Q 2 8.90 46.30 27.60 24.80 2.80 2.80 10% 10% 7.85
Q 3 8.40 49.00 28.70 25.73 2.97 2.97 10% 10% 8.82
Q 4 7.80 57.00 32.40 27.38 5.02 5.02 15% 15% 25.20
Q 1 7.10 54.00 30.55 30.33 0.22 0.22 1% 1% 0.05
Q 2 6.20 48.30 27.25 30.74 (3.49) 3.49 -13% 13% 12.15
Q 3 9.00 48.00 28.50 29.27 (0.77) 0.77 -3% 3% 0.59
Q 4 8.20 46.30 27.25 28.54 (1.29) 1.29 -5% 5% 1.65
Q 1 9.00 39.10 24.05 27.63 (3.58) 3.58 -15% 15% 12.78
Q 2 8.60 44.40 26.50 25.90 0.60 0.60 2% 2% 0.36
Q 3 8.50 44.00 26.25 25.92 0.34 0.34 1% 1% 0.11
Q 4 8.90 43.50 26.20 25.89 0.32 0.32 1% 1% 0.10
Q 1 8.80 39.90 24.35 26.28 (1.93) 1.93 -8% 8% 3.71
Q 2 8.70 39.20 23.95 25.29 (1.34) 1.34 -6% 6% 1.78
Q 3 8.80 38.00 23.40 24.52 (1.12) 1.12 -5% 5% 1.25
Q 4 8.90 39.00 23.95 23.76 0.20 0.20 1% 1% 0.04
2014 Q 1 23.79 (23.79) 23.79 565.73
Sum 950.95 912.32 (14.25) 111.04 5% 364% 902.86
N 40 38 38 38 37 37 38
Mean Absolute Error 2.92
Mean Percentage Error 0.00
Mean Absolute Percentage Error 0.10
Mean Squire Error 23.76
Root Mean Squire Error 4.87
2010
2011
2012
2013
2004
2005
2006
2007
2008
2009
58
Figure 4.12.1
-
10.00
20.00
30.00
40.00
50.00
60.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Telecommunication Industry
Dialog Telekom
Sri Lanka Telecom
Industry AverageQuarter Price (Yt)
Forecasted SharePrice
59
Figure 4.12.2
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Pri
ce p
er S
ha
re
Telecommunication Industry
IndustryAverageQuarter Price(Yt)
ForecastedShare Price
60
Chapter 5 Conclusion
This paper depicts the fact that the usage of weighted moving average technique in
forecasting stock market prices. In this paper, all listed and quoted companies were selected
and categorized them into twelve industries. Then the derived results were presented in
tabulated form as well as graphical method as highlighting the industry stock price movement
as well as individual companies’ share price movement to obtain the better investment
decisions mainly for the potential investors. The forecasting ability of model is accessed on
the basis of MPE, MAPE, MSE, MAE, and RMSE.
This state of the art tried to sum up the actual tendencies observed in the development of
weighted moving average method as tools to forecast stock movement. To determine the
performance of our model, an empirical study was carried out with the published stock data
in Colombo Stock Exchange obtained from the internet, where the weighted moving average
approach was used to forecast the share prices of individual companies as well as industry as
a whole.
The empirical results obtained showed high level of accuracy for daily stock price prediction
with weighted moving average approach performing better than some other analysis
approaches such as NAVI method. Therefore, the weighted moving average approach has the
potential to enhance the quality of decision making of investors in the stock market by
offering more accurate stock prediction compared to existing technical analysis based
approach. In future work, we intend to determine the critical impact of specific fundamental
analysis variables on quality of stock price prediction.
Based on the results obtained only two industries were identified as the forecasted share price
increasing industries namely beverage industry and insurance industry. Ceylinco insurance
company and Nestle Lanka Plc were the highest share price reported companies in insurance
industry and beverage industry respectively. Regarding future line of research, efforts should
be put to use the different kinds of forecasting techniques mainly including the Artificial
Neural Network, NAVI method, exponential smoothing method, etc. More importantly, the
empirical literature indicates the forecasting the share price should extended for foreign share
markets without only limiting to Sri Lankan share market which is more important to foreign
investors.
61
Chapter 6 Recommendations
1. The researcher has investigated that every investors should take the wise decisions
before selling the existing shares or before purchasing the new shares since, only two
industries namely beverage and insurance industries forecasted share price going to be
increased further where as all other industries’ forecasted share price going to be
decreased.
2. Once the industry has been selected to invest, it is essential to select the best company
in the selected industry to invest and obtain the capital gain. As examples, Ceylinco
Plc is the highest share price reported company in the insurance industry where as
Nestle is the highest share price reported company in the beverage industry.
3. Regarding future line of research, efforts should be put to use the different kinds of
forecasting techniques mainly including the Artificial Neural Network, NAVI
method, exponential smoothing method, etc.
4. More importantly, the empirical literature indicates the forecasting the share price
should extended for foreign share markets without only limiting to Sri Lankan share
market which is more important to foreign investors.
62
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