Quantitative Analysis (QA)
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Quantitative Analysis - What Does it Mean?
In quantitative analysis, relationships and behaviors are explained through statistical modeling, measurement, and research. In other words, it attempts to represent a given reality through a numerical value. By collecting numerical data, we can measure the frequency of events and gain insight into the actual conditions. As a result, quantitative analysis can be used for measuring, evaluating, valuing, and predicting events (for example, forecasting the exchange rate).
Applications of Quantitative Analysis
Many fields employ quantitative analysis, such as analytical chemistry, financial analysis and social sciences. Analysts who specialize in quantitative analysis are often referred to as "quants" in the financial industry.
For monetary and other economic policy decisions, governments rely on quantitative analysis. Governments and central banks track and evaluate statistical data, such as GDP and employment figures.
Quantitative analysis is employed in the financial services industry to determine good investment opportunities. When making investment decisions, it may be used to decide whether to buy, hold, or sell securities. For this purpose, price-earnings ratios (P/E ratios) as well as earnings per share (EPS) can be calculated. As an example of more complex calculations, discounted cash flow valuation models are used to assess the value of companies.
Quantitative Analysis and Qualitative Analysis
Although quantitative analysis is an effective evaluation tool, it is often combined with qualitative analysis, which is a complementary research and evaluation technique. Analysts analyze information difficult to quantify, such as the reputation of management or the morale of employees, in order to gain a more accurate picture of a company's performance. The conduct of qualitative analyses often requires a high level of expertise. By combining qualitative and quantitative analysis, a good wealth manager can provide you with the best possible advice.
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