The Topological Network And Investing Roadmap Strategies Of China's A-share Market

In China's stock market, the finance analysts often believe that they can forecast the potential hot industries according to the relationships between industries and benefit from it. But we may be interested in whether this works and can help our investors earn the excess money. This thesis is making effort to have a study on it to see whether it really works. By means of quantitative methodology, the intuitive relationships between the industries are quantified to be the accurate measures for the study. Through the metric"distance", complete industry association network is constructed to describe the complex relationships in the A share market. Furthermore, through the methodology of minimum spanning tree (MST), the complex graph of the A share market was simplified by selecting the most important correlation.With the model from the quantitative relationships, we make an empirical study on kinds of investment strategies which are derived from the quantitative relations. The empirical results show that the investment strategies outperform the market level and earn the excess return under some restriction. The results justify our doubt: In China's A share market, to some extent, realizing and utilizing the relations between the industries seems be rewarding by the excess return.