J R Soc Interface 7(48):10931103. When volatility declines, our portfolio would shift assets to the S&P 500 index fund. Small-world networks are described by clustering coefficient and the characteristic path length properties. Because trade flows between countries are not symmetric (i.e., import (export) of country i from (to) country j is not necessarily equal to import (export) of country j from (to) country i), and countries do not import from themselves, the network in this study is a weighted directed network without self-loops. Applied Network Science Then, the correlation coefficients between centrality measures of the full 102-country network and the reduced 154-country network, and also the correlation coefficients between centrality measures of the reduced 154-country network and the complete 154-country network for the 102 common countries are calculated. In other words, the degree distribution in the trade network has a fat tail, indicating that only a small number of countries are hubs in this network; this is a consequence of the scale-free property in network theory [64, 65]. In such situations, company managers must find ways to allocate resources effectively. While quantitative analysts seek to identify patterns, the process is by no means fool-proof. For instance, based on degree centrality, a central node is a node that has many connections. In order to study the structure of the networks with no intentional interference, a composite index out of the centrality measures is constructed and the core countries of the networks are extracted. In order to study the trade relations between the reporting countries, it is necessary to eliminate the rest of the countries from the 234-country network. Cambridge University Press, Cambridge, Book The correlation coefficients of comparing adjacency matrices in this case for 10 commodity groups and the import and export sectors are presented in Appendix. Similarly, the Kth principal component is the linear combination of the initial indicators that has the smallest variance. The results are illustrated using ten commodity groups from the United Nations Database, which demonstrate that under the proposed reconstruction procedure the ranks of the countries do not change significantly as the size of the imputed network becomes bigger or smaller. Ideally, quantitative models provide company owners with a better understanding of information to enable them to make the best possible decisions.
Physica A 387(15):38683873. Quantitative analysis of trade networks: data and robustness. 2022 BioMed Central Ltd unless otherwise stated. Data mining techniques are used to evaluate very large sets of data to find patterns or correlations concealed within them. As it is shown, there are less deviation from the blue lines, indicating no significant change in the rank of countries in the 154-country and the 234-country trade networks. (5). He received his double major Bachelor of Arts in professional and creative writing from Carnegie Mellon University and his Master of Journalism at Temple University. In Case one, the 154-by-154 adjacency matrix and the 234-by-234 adjacency matrix are considered. With effective product planning and scheduling, companies will be more able to meet their customers needs while maximizing their profits. This research was supported by the Iranian Ministry of Science, Research, and Technology. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. They use quant strategies to identify potential investments and then use qualitative analysis to take their research efforts to the next level in identifying the final investment. Phys Lett A 263(46):341346. We artificially render this matrix incomplete by setting to zero the same fraction of columns as are missing from the 234-country case due to nonreporting. Also, the former issue is studied in two cases with a structure similar to the matrices in Eq. FL140100025. This centrality measure is defined by two endogenous and exogenous components.
The complexity of trading relations and their inter-country distributions within the world trade network has been successfully captured and analyzed in literature by applying network concepts. However, with data technology, quantitative analysis is now considered a better approach to making informed decisions. Quantitative trading analysts (quants) identify trading patterns, build models to assess those patterns, and use the information to make predictions about the price and direction of securities. In this case, nodes that point to many others pass only a small amount of centrality on to each of those others, even if their own centrality is high [31]. J Econ Lit 55(1):4995. The magnitude of the entropy infers how many (and which) counties are the main contributors of the network [54, 57]. https://doi.org/10.1002/wics.101, Sunderland KM, Beaton D, Fraser J, Kwan D, McLaughlin PM, Montero-Odasso M, Peltsch AJ, Pieruccini-Faria F, Sahlas DJ, Swartz RH et al (2019) The utility of multivariate outlier detection techniques for data quality evaluation in large studies: an application within the ondri project. Popularly used ratios in investing, such as earnings-per-share or price-to-earnings ratios, are forms of quantitative analyses. However, with quantitative techniques, companies can be guided on just how many materials they need to purchase, the level of inventory to maintain, and the costs theyre likely to incur when shipping and storing finished goods. Shortest paths, weighted networks, and centrality. Appl Netw Sci 6, 46 (2021). Note that zero entries in adjacency matrices are of two types; one group represents true zeros in the reporting countries reports, and the other arises from nonreporting. volume6, Articlenumber:46 (2021) The dark-colored plot represents the degree distribution in the 234-country network; the network of trading partners. http://www.diw.de/documents/publikationen/73/diw_01.c.43299.de/dp493.pdf, Fagiolo G, Reyes J, Schiavo S (2008) On the topological properties of the world trade web: a weighted network analysis. Business owners are often forced to make decisions under conditions of uncertainty. https://doi.org/10.1002/j.1538-7305.1948.tb01338.x, Zekri H, Mokhtari AR, Cohen DR (2016) Application of singular value decomposition (SVD) and semi-discrete decomposition (SDD) techniques in clustering of geochemical data: an environmental study in central Iran. Typically, this trading strategy will include very specific information about entry and exit points, the expected risk of the trade, and the expected return. Skillicorn [54] states that entropy measures the amount of disorder in a set of objects, and calculates the entropy of the dataset as Eq. One of these limitations is that imports reported by one country do not coincide with exports reported by its trading partners. However, a crucial issue is that there are missing data because in each given year, a number of countries have not reported their trade flows due to delays in reporting, disruptions (war, disaster) in the country, or being a too small or sparsely populated to support reporting infrastructure. https://doi.org/10.1017/nws.2018.6, Gleditsch KS (2002) Expanded trade and GDP data. Matrix B represents a \(N^2\) matrix which contains available data from P reporting countries and their N trading partners, and missing data (the columns of zeros); the leading \(N\times P\) part of this matrix contains the available data and the rest shows the missing data. In order to fill the gap in previous studies, a trade network based on all the countries and territories in the world trade is constructed and the robustness of studying this imputed network is examined in this article. Things such as revenue numbers, share prices, and other factual information are the inputs they use when performing an analysis. In the import networks, in-degree, PageRank, and authority centrality measures are examined and in the export networks, out-degree, PageRank, and hub centrality measures are considered for the analysis. They are placing their orders to buy and sell based strictly on the numbers accounted for in the patterns they have identified. (5) in the second case The analysis is started with the largest available full matrix like matrix A in Eq. The trade flow data of ten commodity groups in 2016 published by the UN Comtrade database is used in this paper [43]. Additionally, the similarity between two correlation coefficients in the two pairs of adjacency matrices is tested at the significance level (\(\alpha\)) less than 0.01. Since computers do the work, firms that rely on quant strategies do not need to hire large, expensive teams of analysts and portfolio managers. Wiley Interdiscip Rev Comput Stat 2(4):433459. The composite index out of the centrality measures are constructed using principal component analysis (PCA) method. Figure2 illustrates the results in Table1. Eur Phys J B 63(4):541545. The endogenous component, \(\alpha \mathop {\sum _{j}} a_{ij}\cdot {{x_j}/{d^{out}_j}}\), is based on the network topology, and the exogenous component, \(\beta\), is independent of the network structure [40]. The difference between imputed and actual network adjacency matrices is evaluated based on several centrality measures. Step 1: Available matrices in Eq. In scale-free networks it is possible to study the tail, i.e., large values of degree. Exploration of what constitute suitable data, how to deal with missing data, and demonstrating the initial results using key network measures are investigated in this study. Quantitative analysis is any type of analysis that relies on quantitative factors, namely things such as a companys revenues, price-to-earnings ratio, and other metrics. https://unstats.un.org/unsd/trade/eg-imts/IMTS%202010%20(English).pdf, Kendall MG (1970) Rank correlation methods. These results also show that trade networks in all the commodity groups are formed based on the bilateral trade between a tiny number of central countries, indicating the scale-free property of these networks. J Int Money Finance 91:111. Quantitative techniques are also used to evaluate investments. These issues are valid for all commodity groups in import and export sectors. Other types of quantitative analysis include financial modeling, optimization, and data mining. The UN Comtrade database has some limitations. https://doi.org/10.1016/j.physa.2008.01.050, MathSciNet Many investment strategies use a blend of both quantitative and qualitative strategies. The logic behind this is that the core countries are extracted by using a composite index of the network structural measures. Other types of networks that have a specific degree distribution include scale-free networks which have a power-law degree distribution [36,37,38], with probability proportional to a negative power of the degree. Cambridge University Press, Cambridge, Onnela J-P, Saramki J, Hyvnen J, Szab G, Lazer D, Kaski K, Kertsz J, Barabsi A-L (2007) Structure and tie strengths in mobile communication networks.
