Investigating Dependence Structure Among Subsectors of Technology Stocks: A Vine Copula Approach
Keywords:
dependence structure, technology stock, sectoral market, stochastic model, vine copulaAbstract
The rising popularity of technology stocks, driven by their substantial returns, underscores the importance of comprehensively understanding the interdependencies among various technological subsectors. This research employs the vine copula model to analyze the complex interdependence among different segments of the technology industry. The results indicate that the C-vine model demonstrates superior effectiveness in capturing the dependence structures within the dataset, outperforming both the R-vine and D-vine structures. This superior performance is crucial for accurately mapping the intricate relationships that define the technology sector. Furthermore, through an exhaustive investigation of 25 specific technological subsectors, the study emphasizes the critical significance of smart grids, smart factories, robotics, and future payment systems. These findings highlight the pivotal role these subsectors play in the broader technology landscape. The enhanced understanding provided by the C-vine model offers valuable insights for investors and policymakers, aiding in the navigation of the rapidly evolving technological environment.
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