Demonstration Between The Industry Prosperity And The Indexes Of The Industries On The Stock Market

Industry analysis is an important loop in the investment analysis of stocks and is the bridge that links macro-economic analysis and analysis of companies listed on the stock market. One of the most important tasks of industry analysis is to discover the industry with the best investment potential and then make investment allocations that follow in the direction of-the industries with the largest potentials that can theoretically obtain larger gains on investments for investors. Analysis on the extent of the industry prosperity is a type of industry analysis method. By conducting analysis on the extent of the prospects in the industry, fairly accurate and timely understandings of the status of the production and operations within an industry can be grasped and the changing trends in the development of the industry can be predicted that will lead the investor to make correct investment decisions in the stock market.The special characteristics of the stock market in China that is described as being a surging market on one day and then a derailing train the next has to a certain decided the inability of the investors in China to be able to copy the effective theories of western markets that link economic cycles and the stock market to serve as their theoretical foundation for investment in the stock market.This paper uses some of the contents of econometrics, including computations and proving of related coefficients and monadic linear regression analysis methods to analysis the degree of association between the various circumstances for the prosperity in each industryin China and the performance of related industries in the stock market as well as the industry indexes. Through conducting this type of analysis, the paper, hopes to provide the investors in China with some definite assistance in their allocations to the various industries during the course of stock investments.Through conducting associative analysis of the extent of prosperity in each industry in China and the indexes of the industries on the stock market we discovered that, although the degree of association of the various industries with the indexes of the related industries on the stock market is not very high on the whole in China, looking at it in a comparative manner, the degree of association is higher in related industries on the market whose total assets account for a large portion of the total assets within the entire industry verses those industries that occupy a small portion and that the degree of association was also higher amongst industries that have a large amount of total assets verses industries that have a comparatively small amount of total assets.The paper does a considerable amount of background analysis on just this one statistical result alone and also analyses the reasons in this result.Lastly, the paper point out that securities market doesn' t get a good price-finding function . It couldn' t get the expecting profits if we analyses the industry prosperity simply to guide the investment.