Stock Price-volume Relation Model Based On Material Distortion Theory

Various financial tools are evolving again and again, with economy durative developing. As an early financial product, stocks hold a more and more important status in civil lives nowadays, and is regarded gradually even as an index of national economy. Perfecting in practice, international experts' study also develop. Much research refers to the validity in Chinese stock market, response of stock market to information, and so on. But few scholars research the trading volume and price relationship in China.Price-volume relationship is considered is a certain relation in finance market recently. Not only because price-volume relation is an effective mean to know the structure of finance market, but also an important technique to research the arbitrage change and market efficiency. Generally, trading volume is considered internal impetus in stock market, reflecting the supply and need instance straight and decide stock price change current. In modern financial theory, any factors that affect stock market will be reacted in market action, so trading volume and price are the more basic variables to depict stock return and risk.For these reasons, author select closing price, maximum price, minimum price, trading volume, trading quantum and stock turnover between 4^th Jan.1999 and 10^th Dec.2007 in Chinese stock market, ignoring pause data. From the price-volume relation theory, introducing dynamics of metal material, combining stock price and financial time-series knowledge, employing econometric method, the paper improve stock price elasticity model and plasticity model by three different steps, and gain a better model about the difference of equilibrium price finally. At last, a new elasticity model and plasticity mixed model is put. The result is very ideal, according theoretic analysis formerly.Price-volume relation model contact material elasticity and plasticity and stock price and volume, analyzing the law of stock price change. Price-volume internal relation is depicted by a new view and perfecting price-volume relation theory, so it has theoretic meaning. A great lot of factors can affect stock price, so it is very difficult to forecast stock price. But stock price elasticity model and plasticity mixed mode can denote simply, and the date can obtain easily also. So there is another practical significance to policy maker and investor to decide.