An Exploratory Study of Geospace Perturbations Using Financial Analysis Tools in the Context of Complex Systems

Abstract

In the frame of complex systems research, methods used to quantitatively analyze specific dynamic phenomena are often used to analyze phenomena from other disciplines on the grounds that are governed by similar dynamics. Technical analysis is considered the oldest, currently omnipresent, method for financial markets analysis, which uses past prices aiming at the possible short-term forecast of future prices. This work is the first attempt to explore the applicability of technical analysis tools on disturbance storm time (Dst) index time series, aiming at the identification of similar features between the Dst time series during magnetic storms (MSs) and asset price time series. We employ the following financial analysis tools: simple moving average (SMA), Bollinger bands, and relative strength index (RSI), formulating an analysis approach based on various features, appearing in financial time series during high volatility periods, that could be found during the different phases of the evolution of an MS (onset, main development, and recovery phase), focusing on the temporal sequence they occur. The applicability of the proposed analysis approach is examined on several MS events and the results reveal similar behavior with the financial time series in high volatility periods. We postulate that these specialized data analysis methods could be combined in the future with other statistical and complex systems time series analysis methods in order to form a useful toolbox for the study of geospace perturbations related to natural hazards.

Editorial of Special Issue “Detecting Geospace Perturbations Caused by Earth”

“…In the frame of complex systems, Zitis et al [5] studied the time series of the Disturbance storm time (Dst) geomagnetic activity index in terms of the empirical financial analysis method known as technical analysis, focusing on the temporal evolution of geospace magnetic storms. Specifically, they employed the combination of three very popular tools of technical analysis, the simple moving average (SMA), Bollinger bands and the relative strength index (RSI).…”