ARIMA Model, Discounted Cash Flow Analysis, and Dividend Discount Model for Five Technology Stocks' Pricing and Trading Strategy

Abstract

This study examines the ability of three widely used financial and econometric models-the Autoregressive Integrated Moving Average (ARIMA), the Discounted Cash Flow (DCF), and the Dividend Discount Model (DDM), to accurately forecast the stock prices of five well-known technological companies. Every theoretical framework offers a unique point of view. DDM places an emphasis on the value of expected future dividends. Collecting historical information on each stock and then applying that information to the relevant models in order to make projections about future stock values was an integral part of the process. In order to evaluate the accuracy, dependability, and applicability of each model in regard to the technology equity, a head-to-head comparison was carried out. Based on the preliminary findings, it appears that while ARIMA can provide valuable insights for price changes in the short term, DCF and DDM can provide a more comprehensive view of the long-term intrinsic worth of a company's stock. However, the effectiveness of each model differed among the several technological stocks that were considered, underscoring the relevance of selecting a model that is adapted to the particular qualities and dynamics of a specific stock as well as the industry in which it operates.