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Liquidity and the multiscaling properties of the volume traded on the stock market

Z. Eisler1 and J. Kertész1,2

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We investigate the correlation properties of transaction data from the New York Stock Exchange. The trading activity fi(t) of each stock i displays a crossover from weaker to stronger correlations at time scales 60–390 minutes. In both regimes, the Hurst exponent H depends logarithmically on the liquidity of the stock, measured by the mean traded value per minute. All multiscaling exponents τ(q) display a similar liquidity dependence, which clearly indicates the lack of a universal form assumed by other studies. The origin of this behavior is both the long memory in the frequency and the size of consecutive transactions.


PACS

89.65.Gh Economics; econophysics, financial markets, business and management

89.75.-k Complex systems

05.40.-a Fluctuation phenomena, random processes, noise, and Brownian motion

Subjects

Statistical physics and nonlinear systems

Dates

Issue 2 (January 2007)

Received 19 June 2006, in final form 20 November 2006

Published 9 January 2007



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