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Biotech / Medical : Biotech Valuation
CRSP 50.19+1.8%Nov 21 9:30 AM EST
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To: Jibacoa who wrote (4058)6/7/2001 4:39:39 PM
From: Biomaven  Read Replies (1) of 52153
 
Bernard,

What I'm doing is somewhat similar, but quite a bit more sophisticated. It's as if you came up with (say) four indices that between them explained as much of the biotech universe stock movement as possible, and then took each individual stock and tried to explain as much of its movement as possible using some (linear) combination of these indices. What is left unexplained are the movements that are somehow peculiar to the individual stock.

(For the mathematically inclined, the four "indices" would correspond to the first four eigenvectors in the singular value decomposition of the matrix of normalized stock returns.)

Turns out of course that this wasn't an original idea - other people have tried similar ideas, although I haven't seen much practical stuff published.

This paper (which someone on SI pointed me to when I first was talking about this) attempts to use an even more sophisticated analysis to come up with more "natural" eigenvectors:

open.brain.riken.go.jp

The statistics in the above paper is mostly way above my head I'm afraid, but conceptually they are doing a similar thing.

Incidentally, very similar techniques are used to analyze gene expression data, so I'm not totally OT here. <g>

Peter

P.S. ASTM likely jumping in sympathy with the other stem cell plays. Pity the world doesn't know that BTRN is one of them...
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