Stock Trading Strategy Based on Grey Situation Decision Model: An Empirical Study of the Electronic Component Industry in Taiwan

摘要

This study aims to establish a stock trading strategy through the grey situation decision approach. The objective of this study attempts to provide some references for individual and institutional investors in making stock trading strategy by constructing a simpler, more stringent and effective stock selection model. The dimensions in the proposed model can be used with the approach of grey situation decision to categorize the stocks of listed companies in the Taiwanese electronic component industry into four types, referred to as value, monitoring, speculative and avoidance respectively. Analytical results indicate that the proposed stock selection model possesses a precise discriminative ability for accurately predicting future stock returns. Especially for identifying stocks to be avoided that are expected to have inferior returns to others, they performed as expected, while the value and monitor stocks identified by the model proved less risky than other types of stocks.