Stock Price Analysis Based On Heterogeneous Behavior Of Investors

This paper describes the theory of behavioral finance and the average investment attitude model based on it. This paper describes the theoretical basis and derivation process of the original model, then simulates the state of the stock market on a variety of parameters and analyzes the limitations of the model.Based on the average market investment attitude model, this paper introduces the concept of heterogeneity of investors, and establish a dynamic model of conversion among market players combined with the characteristics of China’s stock market trading, which is called the introduction of traders heterogeneity of the market average investment attitude model. In this model, subject of all transactions are divided in two ways, one is divided by stock buyers and sellers and the other is by basis traders and technical traders. On this basis, the market equilibrium is defined as three aspects of the balance:the equilibrium of stock buying and selling power, the stable number of based traders and technical traders and the stability of stock market price.After mathematical modeling, we will analyze the stability of the new model and set a series of parameters and initial values of variables to make the model steady, and then make numerical simulation using MATLAB software to obtain the stock price time series graph under different parameter values. According to figure analyzing, we can get the following conclusions. First of all, with the strengthening of herding in a certain range, the speed of stock prices converge to its fundamental value is getting slower, and beyond the critical point, the stock price will be no longer convergent, but even divergence. Secondly, the traders are more sensitive about the stock price deviating from its basic value, the lower rational degree will be. Thirdly, the initial state of the average market investment attitude in stock market affects the path of prices to return to its basic value by the. Finally, when the speed of conversion between buyers and sellers is different, the convergent value of the stock price will deviate from its basic value. The results show that the new model has the properties of the original model, and it also can analyze how traders’rational degree and transition probability affect the stock market.