An Analysis of the Time Series of the PepsiCo, Inc. (PEP) Share Price and a Prediction of its Development

Abstract

The paper deals with the topic of stock time series and their forecasts. The aim of the paper is to provide a detailed analysis of the time series of PepsiCo, Inc. (PEP) shares and subsequently, to use machine tools to predict its further development. The results of the paper in their first part identify the boundaries of RSI indicators for the oversold or overbought market and moreover, with the help of these indicators, predict further possible development of the time series. Daily share price data from PepsiCo, Inc. from the end of April 2019 to the end of April 2020 are used. Two indicators have been recorded since the beginning of 2020. The first one, recorded at the end of January, recommended the trader to sell the position, and further developments suggest that this step would be correct, as stock values then began to fall sharply. The second indicator was identified at the beginning of March, when the world was shaken by the coronavirus crisis, and this indicator recommended the trader to buy a position. Further developments indicated that this would be the right move, as stock values rose in the following period. Moreover, the moving average method is employed as well. Values are calculated for 50, 100 and 200 days. With this tool, only one recommendation is identified, in March 2020, when the fast moving average intersected both slower moving averages, and the ideal solution was to sell the position, which could be described as the right step with the further development of the time series, because stock values began to fall again after this period.

Keywords

• prediction
• stock price development
• time series
• moving average
• rsi indicators
• strategy