Abstract
The objective of this paper is to examine the relationship between aggregate stock market trading volume and daily stock returns during 2/20/2009-3/11/2011 during which the events happened in Pakistan. This paper is evaluating the instability in the stock market due to the political events and the dependency of fluctuations in stock returns and trading volume. The hypothesis of this study states, “The political events have a great impact on trading volume and stock return.” Six political events (attack on Sri Lankan cricket team, restoration of C.J. Ashura attack, Pakistan temporarily suspends NATO supply, assassination of Governor Salman Taseer, assassination of Minorities Minister Shahbaz Bhatti) have been considered. The pre and post events data has been collected, in order to determine the impact of these events on KSE. The results show that stock returns moved too much due to change in the trading volume, the same results were found, changes occur in the value of correlation between the trading volume and stock return. The results show that due the nature of event the relation between the trading volume and the stock return fluctuate, from my study I have concluded that the event effect the value of Pearson correlation and due to event the value is decrease from their pre event value.
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