Mastering Financial Data Analysis with Python

Mastering Financial Data Analysis With Python

10 mins read

There are many different ways to invest in the stock market, from buying stocks directly to trading ETFs and more. But what if you’re looking for something outside of the box? A certain type of investment that most people haven’t even heard of? Python can be used as an incredible analytical tool, but it isn’t widely known as a mainstream way to invest. To see how Python can help with investing in the stock market, read on!

Getting Started

Mastering Financial Data Analysis With Python
Image Credits: WallpaperAccess.com

Python is a powerful programming language that is widely used in many industries today. The financial industry is one of the many sectors that have embraced Python.

Python is used for various purposes in finance, such as data analysis, backtesting trading strategies, connecting to financial data sources, and more. In this blog post, we will show you how to get started using Python for financial analysis.

First, let’s go over some fundamentals: what are some common tasks and applications? 

Python can be used for all sorts of tasks in finance. There are lots of different use cases which involve analyzing financial data sets with python scripts, building trading algorithms with it, connecting your own program to external services or running Monte Carlo simulations on your portfolio’s value at risk (VaR). 

What software should I download? You’ll need three things: Python 2 or 3 (whichever you prefer), Numpy for numerical computation, Pandas for exploratory data analysis. Next Steps: Now that you know about some basics, let’s take a look at getting started with an example script!

Understanding Data Types

In order to use Python for financial analysis, it is important to first understand the different data types that are used in this process. These data types include integers, floats, strings, and Boolean values.

Each of these data types has a specific purpose and can be used in different ways. For example, an integer represents a whole number while a float may have decimal points. 

The string data type is composed of any combination of letters, numbers, symbols, or spaces and can be up to 255 characters long.

Strings are often created when you want to store text information like a name or address. The boolean value uses either true or false as its value which determines if something is true or false in computing terms.

The last data type listed here is called None because it does not represent any type at all. The None value will not even allow itself to show up as an output when using print() on your computer screen.

Dictionaries, Tuples, and Lists

Python has a few very powerful data structures that are fundamental to learning how to code. These data structures are called dictionaries, tuples, and lists. 

Dictionaries are a way of storing data where each piece of data is associated with a key. This is similar to how a real dictionary works, where each word is associated with a definition. 

Tuples are like lists, but they are immutable, meaning they cannot be changed. Tuples are often used for data that should not be changed, such as days of the week or the months of the year. 

Lists are the most versatile data structure in Python. Lists can contain any type of data, and they can be changed.

Functions, Operators, and Conditionals

In Python, functions perform a specific task, operators perform an operation on one or more variables, and conditionals are used to check whether a condition is true or false. You can use these three components to write programs that analyze financial data.

For example, you could write a program that calculates the average stock price over a period of time, or that determines whether a stock is undervalued or overvalued.

Functions can be written in many different ways, depending on what they do. The code below uses two functions-one called getAvgPrice which calculates the average stock price, and another called is Undervalued which determines if a stock is undervalued.

For Loops, If Statements, and List Comprehensions

Python is a versatile language that you can use for building all sorts of applications, including financial analysis tools. In this post, we’ll go over how to use Python for financial analysis.

We’ll cover the basics, like iterating over collections and loops and conditional statements like if statements and list comprehensions.

If you’re new to Python or finance in general, this will be an easy introduction to some of the most popular features used in these fields. Let’s get started! The first thing you need to know about when using Python for finance is that it operates on two main data structures:

Data Visualization in Python with Matplotlib

Image Credits: TowardsDataScience.com

Python is a powerful programming language that is widely used in many industries today. One of the areas where Python has been gaining popularity is finance.

Python is used extensively in financial analysis and data visualization. In this blog post, we will explore how to use Python for financial analysis and data visualization. We will use the Matplotlib library to create visualizations of financial data.

Matplotlib is a powerful tool that allows us to create sophisticated visualizations with ease. It contains high-level 2D plotting functions as well as support for 3D plotting.

Let’s see how we can use it to plot some simple graphs from a CSV file containing stock prices from Apple Inc. (AAPL). To import the module matplotlib and use its functions, we must first import them into our program: 

Example Code:

# importing the required module
import matplotlib.pyplot as plt
	
# x axis values
x = [1,2,3]
# corresponding y axis values
y = [2,4,1]
	
# plotting the points
plt.plot(x, y)
	
# naming the x axis
plt.xlabel('x - axis')
# naming the y axis
plt.ylabel('y - axis')
	
# giving a title to my graph
plt.title('My first graph!')
	
# function to show the plot
plt.show()

Plotting Candlestick Charts with Interactive Data Structures

Candlestick charts are a popular way to visualize financial data, and Python has several libraries that make it easy to create them. In this post, we’ll use the plotly library to create interactive candlestick charts. Plotly’s API is robust, and allows us to customize the look of our charts with just a few lines of code. 

Example code:-

# import required packages
import matplotlib.pyplot as plt
from mplfinance import candlestick_ohlc
import pandas as pd
import matplotlib.dates as mpdates

plt.style.use('dark_background')

# extracting Data for plotting
df = pd.read_csv('data.csv')
df = df[['Date', 'Open', 'High',
		'Low', 'Close']]

# convert into datetime object
df['Date'] = pd.to_datetime(df['Date'])

# apply map function
df['Date'] = df['Date'].map(mpdates.date2num)

# creating Subplots
fig, ax = plt.subplots()

# plotting the data
candlestick_ohlc(ax, df.values, width = 0.6,
				colorup = 'green', colordown = 'red',
				alpha = 0.8)

# allow grid
ax.grid(True)

# Setting labels
ax.set_xlabel('Date')
ax.set_ylabel('Price')

# setting title
plt.title('Prices For the Period 01-07-2020 to 15-07-2020')

# Formatting Date
date_format = mpdates.DateFormatter('%d-%m-%Y')
ax.xaxis.set_major_formatter(date_format)
fig.autofmt_xdate()

fig.tight_layout()

# show the plot
plt.show()

Note: For the coding part in this page try it and get the output by yourself.

Video Credits: GreatLearning ( YT Channel )

Verdict

There are many useful tools to extract, analyze, and generate insights from financial data. This combination of tools makes it easy for beginners to start working with financial data in Python.

Together, these skills can be used for personal investing, algorithmic trading, portfolio building, and more. Being able to quickly generate statistical insights, visualize relationships, and identify trends in financial data is invaluable to any analyst or data scientist interested in finance.

Leave a Reply

Your email address will not be published.

Latest from Blog