Introduction
This Rmd file serves as a brief analysis report on NVIDIA stock, a highly discussed stock over the past 5 years. The report covers stock data spanning the last decade, from February 28, 2014, to February 28, 2024. The analysis emphasizes the daily, weekly, and monthly discrete and continuous returns of the stock. Additionally, a technical analysis was conducted using various indicators to provide insights on potential buy or sell signals for the stock.
10 years discrete and continuous returns
For this section daily, weekly and monthly discrete and continuous returns for the given period of 10 years were collected on the stock. The 10 years monthly and discrete returns are given below:
In the depicted plots, we observe a remarkable similarity in returns for the given 10-year period. Notably, the highest recorded return occurred at the end of May 2017, registering an impressive 0.325%. Conversely, the lowest return was noted at the end of April 2022, showing a downturn with a value of -0.387%.
On average, the discrete returns hover around 0.052%, slightly edging out the continuous returns, which stand at 0.042%. When looking at the median, the discrete returns have a value of 0.055%, while the continuous returns closely follow at 0.054%.
Technical Analysis of NVIDIA Stock for the past 10 years (28th February 2014 - 28th February 2024)
From the above plot we can see 3 technical analysis indicators has been added in order to analyse the stock for the given period of 10 years.
The Bollinger Bands indicated by the outer red bands on the price chart, to indicate whether the stock is “overbought” or “oversold”, the indicator is also useful when determining volatility. If the bands are close together it indicates a low volatility also known as the “squeeze”, when the bands are far apart it indicates a higher volatility. From the plot above we can see that up until Feb 2021, the bands are close to the price chart indicating low volatility, however as time progressed the price of the stock went up and the volatility also rose. By the end of our given time period we see that our final price is around $787 and the upper bound of the Bollinger Band is at around 812, thus this stock has not been “overbought” and thus it is a good opportunity to get hold of the stock now.
The MACD indicator or Moving Average Convergence Divergence indicator help shows the trend direction of the stock as well its momentum.The indicator is helpful in identifying trade signals, when the MACD is above zero, the price is in an upward phase, if it goes below zero it is in a bearish period. From the plot above we do see that the MACD has been on the rise in the 2 months of 2024, indicating that it would be best to buy the stock as MACD has only been rising for the last few months, which suggests that the stock is gaining more momentum.
The RSI indicator or Relative Strength Index indicator also shows us whether the stock is overbought ot oversold. If the indicator rise above 70 it is considered overbought, and if the indicator drops below 30 it is considered oversold. Thus, by looking at the most recent RSI we see that the number is 73.003 which may indicate that it is overbought, however as both MACD and the Bollinger Bands indicate a buy recommendation, thus it is safe to say that buying the stock would be the best option.
Conclusion
In conclusion, we see that NVIDIA stock has been rising for the past 10 years, and the technical analysis indicators also point towards a greater price in the coming days which means buying the stock now would be the best option.The stock has become prominent in the last 5 years, right after the bitcoin crash of 2018. The pandemic saw a rise in NVIDIA’s GPUs as it supported gaming, remote work and in COVID-19 research, which raised the stock’s price. However in 2022, due to rising inflation and the beginning of the Russia-Ukraine conflict which disrupted the supply chains and this was reflected in the fall in their stock price.However, with the release of OpenAI’s ChatGPT and other AI models saw a rise in NVIDIA’s stock price as its GPUs where essential in training these models in machine learning which sparked investor confidence and thus the stock price have only went higher from there.