Abstract
This study investigates the effectiveness of six of the key international indices in estimating Saudi financial market (TADAWUL) index (TASI) movement. To investigate the relationship between TASI and other variables, six equations were built using two independent variables of time and international index, while TASI was the dependent variable. Linear, logarithmic, quadratic, cubic, power, and exponential equations were separately used to achieve the targeted results. The results reveal that power equation is the best equation for forecasting the TASI index with a low error rate and high determination coefficient. Additionally, findings of the AutoRegressive Integrated Moving Average (ARIMA) model represent the most important variables to use in order to build a prediction model that can estimate the TASI index. The ARIMA model (with Expert Modeler) coefficients are described as ARIMA (0,1,14). The results show that the SP500, NIKKEI, CAC40, and HSI indices are the most suitable variables for estimating TASI with an R2 and RMSE equal to 0.993 and 113, respectively. This relationship can be used on the previous day to estimate the opening price of TASI based on the closing prices of international indices.
Highlights
In recent decades, innovation expression has taken special importance in all fields
According to Chesbrough [2], the open innovation (OI) concept can be defined as exchanging ideas, knowledge, expertise, and technologies through inflows and outflows of communications that will shape a competitive advantage and lead to high performance
The results found that daily news could be used to predict up to a maximum of 2 days ahead, where weekly news can hold a periodic prediction power
Summary
Innovations facilitate the emergence of globalized markets, where every participant has the advantage of being connected regardless of distance, and the world comes together in a way commonly described as a small village. This contemporary village requires its participants to acquire the innovation and competitive advantages once they have both the ability and desire to converge distances between them; otherwise, survival could be imaginary. Szutowski [6] covered 398 open innovation announcements, released by European service companies, and found significant positive effects of OI disclosure on enterprise market values
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