The process of determining the value of a security by examining its numerical, measurable characteristics such as revenues, earnings, margins, and market share. A business or financial analysis technique that seeks to understand behavior by using complex mathematical and statistical modeling, measurement and research. By assigning a numerical value to variables, quantitative analysts try to replicate reality mathematically. In broad terms, quantitative analysis is simply a way of measuring things.
DECISION THEORY MODELS
Decision theory is an interdisciplinary area of study that concerns mathematicians, statisticians, economists, philosophers, managers, politicians, psychologists and anyone else interested in analyses of decisions and their consequences. it is concerned with identifying the best decision to take, assuming an ideal decision maker who is fully informed, able to compute with perfect accuracy, and fully rational. The practical application of this prescriptive approach (how people actually make decisions) is called decision analysis, and aimed at finding tools, methodologies and software to help people make better decisions. The most systematic and comprehensive software tools developed in this way are called decision support systems.
DECISION TREES
(or tree diagram) is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. Decision trees are commonly used in operations research, specifically in decision analysis, to help identify a strategy most likely to reach a goal. Another use of decision trees is as a descriptive means for calculating conditional probabilities.
FORECASTING
the process of estimation in unknown situations. Prediction is a similar, but more general term. Both can refer to estimation of time series, cross-sectional or longitudinalhydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. Risk and uncertainty are central to forecasting and prediction. Forecasting is used in the practice of Customer Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and a consensus process.Forecasting is commonly used in discussion of time-series data.
LINEAR PROGRAMMING
In mathematics, linear programming (LP) is a technique for optimization of a linear objective function, subject to linear equality and linear inequality constraints. Linear programming determines the way to achieve the best outcome (such as maximum profit or lowest cost) in a given mathematical model and given some list of requirements represented as linear equations.
Linear programming can be applied to various fields of study. Most extensively it is used in business and economic situations, but can also be utilized for some engineering problems. Some industries that use linear programming models include transportation, energy, telecommunications, and manufacturing. It has proved useful in modeling diverse types of problems in planning, routing, scheduling, assignment, and design.
references:
- http://www.investorwords.com/4001/quantitative_analysis.html
- http://en.wikipedia.org/wiki/Linear_programming
- http://en.wikipedia.org/wiki/Decision_theory
- http://en.wikipedia.org/wiki/Decision_tree
- http://en.wikipedia.org/wiki/Forecasting