Stock Price Forecasting for Jordan Insurance Companies Amid the COVID-19 Pandemic Utilizing Off-the-Shelf Technical Analysis Methods

Ghada A Altarawneh,Mansoor Alghamdi,Ahmad Abadleh,Ahmad B Hassanat,Ahmad S Tarawneh,Malek Alrashidi

doi:10.3390/economies10020043

Ghada A Altarawneh, Mansoor Alghamdi + Show 4 more

Open Access

https://doi.org/10.3390/economies10020043

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Abstract

One of the most difficult problems analysts and decision-makers may face is how to improve the forecasting and predicting of financial time series. However, several efforts were made to develop more accurate and reliable forecasting methods. The main purpose of this study is to use technical analysis methods to forecast Jordanian insurance companies and accordingly examine their performance during the COVID-19 pandemic. Several experiments were conducted on the daily stock prices of ten insurance companies, collected by the Amman Stock Exchange, to evaluate the selected technical analysis methods. The experimental results show that the non-parametric Exponential Decay Weighted Average (EDWA) has higher forecasting capabilities than some of the more popular forecasting strategies, such as Simple Moving Average, Weighted Moving Average, and Exponential Smoothing. As a result, we show that using EDWA to forecast the share price of insurance companies in Jordan is good practice. From a technical analysis perspective, our research also shows that the pandemic had different effects on different Jordanian insurance companies.

Highlights

According to the Amman Stock Exchange (ASE), Jordan has 20 insurance businesses listed, as well as several companies that have been liquidated owing to financial problems
We evaluate the forecasting outcome using different error measures such as mean absolute error (MAE), mean percentage error (MPE), mean square error (MSE), tracking signal (TS), and mean absolute percent error (MAPE)
weighted moving average (WMA) and exponential smoothing approaches (ES) are both used to create the Exponential Decay Weighted Average (EDWA) forecasting method. This method considers the entire time series as we argue that a technical analysis method that takes into account all data, not just some historical data points, is beneficial for forecasting in general, and for forecasting stock price of Jordanian insurance companies in particular, as these companies’ challenges and problems have persisted for a long time

Summary

Introduction

According to the Amman Stock Exchange (ASE), Jordan has 20 insurance businesses listed, as well as several companies that have been liquidated owing to financial problems. This is a huge number for a small country such as Jordan, whose insurance market is relatively small compared to many of its regional peers, contributing to around 3% of the MENA region’s gross written premiums. This is seen when compared to a much larger country such as Egypt, which only has 32 insurance companies, some of which are among the region’s oldest (Oxford Business Group 2017). Because the majority of the market is concentrated on third-party vehicle insurance, whose premiums are set by the government, merging two motor-focused companies to form a larger one makes no sense

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