Analytical Model to Understand the Performance of Investment Advisory – Bayesian Approach

Abstract

Aninvestment advisory is a service-oriented organisation that buys and sells shares, on behalf of their customers. Thegoal of this studyis to identify a profit/loss pattern for four quarters in call recommendations (Buy/Sell). However, there seems to be a very few or no effort to generate performance indicators for investment advisors based on historical data on their investment advice. The inherent advantage of dealing with Bayesian modelling has been attempted using the necessary models applying adequate underlying parameter transformation. The variation in four quarters could be achievedthrough the measure of heterogeneity and the odds ratio is used to quantify the measure of associations between the variables of interest.To do Bayesian analysis, the complete exercise was conducted using R and R-Stan.