Analysis of Amazon Stock Using Simple Linear Regression and Time Series ARIMA Model

Abstract

The rate of daily return of a stock is one of the important indicators for investors to anticipate benefits or losses from historical data. This paper will focus on the stock of Amazon, which is a popular choice for stock traders and contains data from August 25, 2017, to August 24, 2022. By using regression models such as a simple linear regression model and an autoregressive integrated moving average (ARIMA), the recent daily return value is predicted based on data during these 5 years. The simple linear regression can show the trend of stock price and the predicted response rate of daily return using the linear model. Furthermore, ARIMA is a more advanced time series model to provide a more accurate rate of daily return with confidence intervals. The predicted trend and rate of daily return are useful for investors to make decisions to buy or sell a stock recently. The trend can tell investors whether the stock price would go up and the daily return can indicate how many benefits can they earn if they choose to invest in this stock.