Research On The Application Of Panel Data Model In The Analysis Of Relationship Between Stock Risk And Return

The final purpose of stock investment is to get stock returns and the stock returns is always accompanied with risk. China’s stock market has gone through twenty years of groundless talk, the slump in2006and2007after the bull market, it is not only a financial scholars, including the general public on the stock risk and return relationship topic is concerned. As more and more investors choose to invest in the stock market, how to accurately formulate investment strategy has become an important decision problem for investors.The theory in this paper using the basic theory of variance、regression、panel data model and related risk factors of affecting the stock returns, The factors as much as possible into the panel data regression model.We try to analysis of risk and return in the stock market of Chinese. In this paper, reviewed the stock market risk and return relationship theory, using the standard analysis of variance and regression sample data Chinese stock market100stocks from September2,2013to December31,2013during the analysis of data, to analyze the relationship between return and risk in China stocks market and based on the analysis the conclusion gives some recommendations for stock market regulators and investors.We draw the following conclusions. Firstly, a linear relationship was found between stock return and risk is not the simple sense, but maybe a parabola relationship. Through the concept leads to discrete coefficient square, further implement discrete coefficient square to better interpretation yields hypothesis. Secondly, we found that the relationship between the stock return and risk is affected by the plate and the size of the stock. In general, the stock market follow certain rules that the greater the risk, income is high, but in the context of different plates, scale, the relationship between the stock return and risk are likely to be linear, may also be a parabola, also may be unable to judge. Finally, it is found that the relationship between risk and return in different industries, different size of stock is different. Investors should make investment decisions according to the stock features.