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Fluctuation patterns in high-frequency financial asset returns

T. Preis1,2, W. Paul1 and J. J. Schneider1

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We introduce a new method for quantifying pattern-based complex short-time correlations of a time series. Our correlation measure is 1 for a perfectly correlated and 0 for a random walk time series. When we apply this method to high-frequency time series data of the German DAX future, we find clear correlations on short time scales. In order to subtract trivial autocorrelation parts from the pattern conformity, we introduce a simple model for reproducing the antipersistent regime and use alternatively level 1 quotes. When we remove the pattern conformity of this stochastic process from the original data, remaining pattern-based correlations can be observed.


PACS

02.50.Ey Stochastic processes

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

05.10.Ln Monte Carlo methods

Subjects

Computational physics

Statistical physics and nonlinear systems

Dates

Issue 6 (June 2008)

Received 31 January 2008, accepted for publication 30 April 2008

Published 4 June 2008



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