Research On The Effect Of The Institutional Investors’ Trading Strategy On Stock Price Synchronicity

The stork price synchronicity means that the price changes in the same directionbetween stocks and stocks in the stock market, as well as between the stocks and themarket. Stock market price synchronicity, the company’s stock price does notaccurately reflect the value of the company will weaken the ability of supervision andmanagement of the Corporation, to increase investors on the company’s investmentrisk, studies also show that the price linkage would impair the efficiency of capitalallocation and the efficiency of capital budgeting and investment decisions, CEOchange and a series of economic behavior have a negative impact.The purpose of this study is that to explore the causes of the price synchronicityand find the real reason with the higher level of price Synchronicity in China byanalysing the price Synchronicity of China’s securities market in this speciallycircumstances. Institutional investors have growing up with the development ofChina’s stock market, and it has become an important participant of the securitiesmarket in China. Most of the behavior of institutional investors in the market has asignificant impacted on the securities market. So in this article, we will use themomentum and contrarian trade strategies of the institutional investors to explore theeffect on the price Synchronicity by the limited rational investment behavior. It alsoexplores the function and impact of institutional investors and more accurately toestimates the role of institutional investors in China’s securities market. The studydeeps the understanding of the efficiency of China’s securities market and promotes theChina’s securities market has gradually become mature and effective market to playmore important role in the national economy.In this paper, the trading strategies of institutional investors as the research object,by controlling the variables of the efficiency of price information, accurate and detailedanalysis of the impact of the price linkage. Psychological bias based on the investmentbehavior of institutional investors, respectively, specific consideration ContrarianStrategy and inertial trading strategies of institutional investors, which correspond toeach other trading strategies, taking into account the bull market, bear market, as well as shocks to adjust these three different market conditions situation. The study foundthat:(1) The behavior of institutional investors in the Chinese stock marketperformance is significantly contrarian strategy;(2) Contrarian strategy investmentbehavior of institutional investors and stock price Synchronicity showing a positivecorrelation;(3) At different market environment, the performance of the causes isdifferent between the price synchronicity and investment behavior of institutionalinvestors. In a bear market, stock prices down synchronous fluctuations, due toinstitutional investors on the stock significant price fluctuations synchronization, thestock price linkage degree of the most obvious, confirms the statistical analysis of theresults of the preceding; shock adjustment market, the emotional turmoil in the market,institutional investors Contrarian Strategy in the stock price linkage significant positiveeffect; the unilateral increase bull market, institutional investors Contrarian Strategy bythe homogeneity of the emotional impact of unilateral market stock price linkagecorrelation showed no significant unilateral rising market there is more noise trading,and promote the improvement of price synchronicity.