The Relationship Between Investor Sentiment And China's Stock Returns Based On Behavioral Finance

For the securities investment market of our country,it is still a market that has been established soon.In particular,the stock market is now at a primary stage of development.Although it has achieved amazing results after more than a decade of continuous development,It is often not yet mature in many ways,and has exposed some problems.One of the obvious problems is that there are some irrational features in the stock market.These problems hinder the healthy and stable development of China's stock market to a certain extent.Therefore,in the study of China's securities investment market,it is necessary to fully pay attention to the influence of investors'psychological factors.Behavioral finance is precisely a discipline that studies this aspect.The origin of behavioral finance needs to be traced back to the 1950s,and it can be said that after a long period of development,behavioral finance has made up for the shortcomings of traditional finance to some extent,and has explained and analyzed financial and economic problems in a new Angle.The limited hypothesis,as the innovation point of the theory,breaks the hypothesis of the traditional economic rational person and is more in line with the real situation and phenomenon of the market economy,which can often explain the market phenomenon in real life,which is not explained by traditional economics.Therefore,compared with the traditional rational pedestrians analysis framework of economics,behavioral finance pays more attention to the analysis of the actual psychology and behavior of people,thus can provide more realistic for securities investors and government guidance.First of all,this paper makes a theoretical analysis,explains the investor sentiment,analyzes the influence mechanism of investor sentiment on the stock price in theory,then USES the index to construct investor sentiment indicators,then establishes the VAR model to further confirm the relationship between investor sentiment and Chinese stock price.And then this article USES granger's causation test to show that there is a certain relationship between inve stor sentiment and the return of the gem,and it affects each other.Then,the paper also USES the volatility index of tencent to construct the index of investor sentiment,and then conducts empirical analysis on the Shanghai composite index and the earnings of the gem.Due to the limitation of the data volume,the effective results are not obtained.On the one hand,the research of this paper can help securities investors to identify themselves,reduce irrational investment behaviors,and use behavioral finance investment theory to select investment strategies.On the other hand,it can also provide some reference for the government to formulate corresponding policies.