Equity markets are very complex and hard to
predict. The study of equity market efficiency has been the
objective of many researchers across the globe. To
understand equity markets, it is important to understand
efficient markets. An equity market is said to be efficient if it
fully and correctly reflects all relevant information in
determining security prices. The results of Efficient Market
Hypothesis studies are mixed. Some studies conclude that the
equity markets are efficient, whereas others do not.
Measurements of the deviation from randomness provide a
tool to verify the validity and limitations of the efficient
market hypothesis. One way of interpreting market efficiency
is by Algorithmic complexity theory. This paper depicts
algorithmic complexity and conclude that better and efficient
algorithms need to be developed to understand equity
markets.
Published In:IJCSN Journal Volume 5, Issue 5
Date of Publication : October 2016
Pages : 725-727
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Vinod K : Research Scholar, Department of Computer Science,
Chikkanna Government Arts College,
Tirupur, Tamilnadu, India
Dr. Nasira G.M : Head of Department, Department of Computer Applications,
Chikkanna Government Arts College,
Tirupur, Tamilnadu, India
Dr. Haresh M Pandya : Head of Department, Department of Physics,
Chikkanna Government Arts College,
Tirupur, Tamilnadu, India
From the study of review of literature, it is very clear that
there is no conclusive evidence for the efficient market
hypothesis and a clearer explanation of randomness in the
market can be given by algorithmic complexity theory. It
is also clear that an efficient algorithm which helps to
understand better, the behaviour of financial time series is
required. It is a new area which requires more research.
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