INTERNATIONAL FINANCE

AND
FOREX MANAGEMENT

Presented By:-
Vaishali Aggarwal
MBA(Finance)
A02
 QUESTION TO BE DISCUSSED:-

Use of following statistical tools in analyzing Foreign

Exchange Data
 Mean,
 Variance,
 Co-variance,
 Standard Deviation,
 Regression and
 Correlation
 MEAN
 Mean= average = Sum of all observations
Total No. of observations
 It is used on time series data
 Average calculated can be helpful in trading and future
transactions
 An importer/exporter may have a basic idea from the average
 With respect to trading, buy below average price and sell above
average price
 VARIANCE
 Check volatility and spread
 Variance tells how much data is spread away from the mean
 Foreign currency data follows uniform distribution
 Foreign currency is very volatile
 It is an important tool to analyze that volatility
 CO-VARIANCE
 It tells relationship between two data sets
 It is done on cross-sectional data
 It analyzes the relationship of two different
curriencies
 For example: whether the fluctuations in USD is
related to Sterling Pound
 STANDARD DEVIATION
 It is associated with risk
 Higher the SD, higher the risk


 For example: calculate standard deviation of 5-6 currencies

against a base currency, the currency which has lowest standard
deviation, it is less risky
 REGRESSION
 Assess the magnitude of one or more independent variables on a
dependant variable
 In foreign exchange data, dependant variable is forex price and
independent variables can be own country’s economy, import,
export and other country’s economy
 Variables could differ according to the study
 CORRELATION
 Correlation gives the direction of relationship
 It tells whether currencies are positively related
or negatively.
 It is an extension of co-variance
THANK YOU