7. Discover seasonal stock pricing opportunities

Resolve lag and lead in time series of price movements that have cyclic characteristics. Remove contamination in your price history that results from such cyclic behavior, appearing as return or risk not really present. Find stocks that move in concert with one another according to harmonics of annual rhythms. See how these cyclical movements modulate the trend (return) and significance envelope (accumulated risk) of such a stock.

With Diagoran, you can automatically resolve cycles in price histories, identifying unusual power in parts of the spectrum in the same way that a graphic equalizer illustrates treble and bass levels for a stereo system. For example, here is part of an actual run on a real portfolio (with aliased ticker symbol), as saved in the User Guide:

The first row shows return and risk for one stock, symbol CA1. The next two rows show cyclical influences from a fundamental with a six-month repeat time (183 days) and its first harmonic at three months (93 days), along with numerical estimates of the strengths of the cyclic behaviors. The fundamental explains 57% of the scatter in the stock price history, while the harmonic explains another almost 14%.

The last two rows, assuming that the trend and these two cycles continue, show the dates and stock prices of the next cyclical maximum and minimum price. The four cells with square brackets indicate the calculated range of price at those two dates, as one standard deviation in the accumulated risk. These Maximum and Minimum values might illustrate seasonal pricing opportunities to sell and to buy this stock, if there are no surprises.

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