A Reductive-Investment Analysis is a system of logical and practical approaches, methods of analyzing financial tools of the stock market (securities, currencies, derivative contracts, etc.), for the investor, substantiating and evaluating the feasibility of making investments, and optimizing investment trading operations, to make an effective decision. It is a dynamic process occurring in two planes - time and price. In the time plane, the work is carried out to monitor market expectations. They provide a steady understanding of the process of developing investment objectives. In the price plane, analysis and development of descriptive solutions in different substantive aspects are mainly carried out. These aspects include the econometric component, correctly stated objectives and tasks of investment, analysis of investment risk, and the general sensitivity to changes in certain significant factors.
The Reductive-Investment Analysis, as a descriptive method, combines a set of theoretical techniques and models based on econometric theory, using mathematical and statistical tools (linear regression channel), providing quantitative expressions with visual perception with the further possibility of visual modelling of goals and prospects for further development of the ongoing process. The methodology of the Reductive-Investment Analysis is a research method closely related to the tools of correlation and regression analysis, which is based on the use of the Linear Regression Channel tool available in modern electronic trading platforms. A Reductive-Investment Analysis is a multidimensional method applied for the visualization of the interrelation between the values of quantitative variables. The basic idea of the concerned analysis lies in the fact that available dependencies among large number of initial observable variables give us opportunity to analyze the development of phenomena in time. The methods of the Reductive-Investment Analysis make possible not only to explore the data, but also to choose a method for their further in-depth analysis for examination of the statistical hypotheses and modelling of the further dynamics. In the current analysis, the price information about the examined phenomenon is shown in aggregated form by means of graphic tools. The main objective of the Reductive-Investment Analysis is the modelling of both the future development of the further financial market dynamics by means of descriptive tools, and the corresponding actions of the market participants meant to simplify the analysis procedures.
Fuad Akhundov is a consultant, specializing in the investment analysis of financial markets. He is the author of the econometric system titled "Reductive-Investment Analysis". He created the integrated methods and systems of market analysis, approved by multi-year research. A new analysis and modelling method in financial markets was developed by means of programming and statistical tools such as a regression channel, calculated based on the least squares method. As a result of multi-year empirical research of the stock market (securities, currencies, derivative contracts, etc.), a graphical method of regression analysis of the financial assets traded on the stock exchange has been successfully applied.
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