Trading Strategy Based on the Leading Effect of Leading Stocks: LLR Model and Correlation Coefficient Effect

Stocks is one of the most popular financial tools around the world, However, it is essential to determine which stock to buy and the moment we buy in and sell out, only catch up with the proper opportunity, then we can make fortune from the stock market. So how can we find out those stocks which has great potential to grow in the future? Our study focuses on the leading stocks effect, which refers to in a specific industry, when some stocks in that industry have reached their price limit, which we call leading stocks, and in the following trading days, the stocks from the same industry will be affected by leading stocks and have a potential growth. In that case, if we can find out the leading stock in a specific industry and monitor it growth every day, then base on correlation coefficient, we can determine which stock to buy in and make profit via this strategy.