Maximum-Precision Markov Transition Table: Successive Daily Change in Closing Price of a Utility Stock

Paul R. Yarnold

Optimal Data Analysis, LLC

Research seeking to increase the accuracy of traditional Markov analysis-based models, which assess the outcome (class) variable as a two-category variable, studies the use of over-time weighting schemes. This paper demonstrates how to maximize precision of the class variable by using ODA to weight each individual “observation” (event) in the transition table by its corresponding exact absolute change-in-value.

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