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Stock Price Analysis With Python
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Maverick 01 — Published On July 11, 2021 and Last Modified On May 5th, 2023
Beginner Data Visualization Datetime Python Time Series
Stock price analysis with Python is crucial for investors to understand the risk of investing in the stock market. A company’s
stock prices reflect its evaluation and performance, which influences the demand and supply in the market. Technical analysis of
the stock is a vast field, and we will provide an overview of it in this article. By analyzing the stock price with Python, investors
can determine when to buy or sell the stock. This article will be a starting point for investors who want to analyze the stock
market and understand its volatility. So, let’s dive into the stock price analysis with Python.
Table of contents
Libraries Used in Stock Price Analysis With Python
Data Description
Exploratory Analysis for Stock Price Analysis With Python
Moving Averages for Stock Price Analysis With Python
Scattered Plot Matrix
Percentage Increase in Stock Value
Conclusion
Libraries Used in Stock Price Analysis With Python
The following are the libraries required to be installed beforehand which can easily be downloaded with the help of the pip
function. A brief description of the Library’s name and its application is provided below
Library Application
Yahoo Finance To download stock data
Pandas To handle data frames in python
Numpy Numerical Python
Matplotlib Plotting graphs
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import pandas as pd
Stock Price Analysis With Python
import datetime
import numpy as np
import matplotlib.pyplot as plt
from pandas.plotting import scatter_matrix
!pip install yfinance
import yfinance as yf
%matplotlib inline
Data Description
We have downloaded the daily stock prices data using the Yahoo finance API functionality. It’s a five-year data capturing Open,
High, Low, Close, and Volume
Open: The price of the stock when the market opens in the morning
Close: The price of the stock when the market closed in the evening
High: Highest price the stock reached during that day
Low: Lowest price the stock is traded on that day
Volume: The total amount of stocks traded on that day
Here, we will take the Example of three companies TCS, Infosys, and Wipro which are the industry leaders in providing IT
services.
start = "2014-01-01"
end = '2019-1-01'
tcs = yf.download('TCS',start,end)
infy = yf.download('INFY',start,end)
wipro = yf.download('WIPRO.NS',start,end)
Exploratory Analysis for Stock Price Analysis With Python
Python Code:
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The above
Stock graph
Price is the representation
Analysis With Python of open stock prices for these three companies via line graph by leveraging matplotlib
library in python. The Graph clearly shows that the prices of Wipro is more when comparing it to other two companies but we
are not interested in the absolute prices for these companies but wanted to understand how these stock fluctuate with time.
tcs['Volume'].plot(label = 'TCS', figsize = (15,7))
infy['Volume'].plot(label = "Infosys")
wipro['Volume'].plot(label = 'Wipro')
plt.title('Volume of Stock traded')
plt.legend()
The Graph shows the volume traded by these companies which clearly shows that stocks of Infosys are traded more compared
to other IT stocks.
#Market Capitalisation
tcs['MarktCap'] = tcs['Open'] * tcs['Volume']
infy['MarktCap'] = infy['Open'] * infy['Volume']
wipro['MarktCap'] = wipro['Open'] * wipro['Volume']
tcs['MarktCap'].plot(label = 'TCS', figsize = (15,7))
infy['MarktCap'].plot(label = 'Infosys')
wipro['MarktCap'].plot(label = 'Wipro')
plt.title('Market Cap')
plt.legend()
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Stock Price Analysis With Python
Only volume or stock prices do not provide a comparison between companies. In this case, we have plotted a graph for Volume *
Share price to better compare the companies. As we can clearly see from the graph that Wipro seems to be traded on a higher
side.
Moving Averages for Stock Price Analysis With Python
As we know the stock prices are highly volatile and prices change quickly with time. To observe any trend or pattern we can
take the help of a 50-day 200-day average
tcs['MA50'] = tcs['Open'].rolling(50).mean()
tcs['MA200'] = tcs['Open'].rolling(200).mean()
tcs['Open'].plot(figsize = (15,7))
tcs['MA50'].plot()
tcs['MA200'].plot()
Scattered Plot Matrix
data = pd.concat([tcs['Open'],infy['Open'],wipro['Open']],axis = 1)
data.columns = ['TCSOpen','InfosysOpen','WiproOpen']
scatter_matrix(data, figsize = (8,8), hist_kwds= {'bins':250})
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Stock Price Analysis With Python
The above graph is the combination of histograms for each company and a subsequent scattered plot taking two companies’
stocks at a time. From the graph, we can clearly figure out that Wipro stocks are loosely showing a linear correlation with
Infosys.
Percentage Increase in Stock Value
A percentage increase in stock value is the change in stock comparing that to the previous day. The bigger the value either
positive or negative the volatile the stock is.
#Volatility
tcs['returns'] = (tcs['Close']/tcs['Close'].shift(1)) -1
infy['returns'] = (infy['Close']/infy['Close'].shift(1))-1
wipro['returns'] = (wipro['Close']/wipro['Close'].shift(1)) - 1
tcs['returns'].hist(bins = 100, label = 'TCS', alpha = 0.5, figsize = (15,7))
infy['returns'].hist(bins = 100, label = 'Infosysy', alpha = 0.5)
wipro['returns'].hist(bins = 100, label = 'Wipro', alpha = 0.5)
plt.legend()
It is clear from the graph that the percentage increase in stock price histogram for TCS is the widest which indicates the stock of
TCS is the most volatile among the three companies compared.
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Conclusion
Stock Price Analysis With Python
The above analysis can be used to understand a stock’s short-term and long-term behaviour. A decision support system can be
created which stock to pick from industry for low-risk low gain or high-risk high gain depending on the risk apatite of the
investor.
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