Get Testing Semi Strong Form Market Efficiency

Explanation: As the fundamental analysis gives the abnormal returns over a long period of time, then it is the semi-strong form of efficiency.

Weak form of EMH is tested using the Kolmogorov-Smirnov goodness of fit test, run test and autocorrelation test. The K-S test result concludes that in general the stock price movement does not follow random walk. The results of the runs test reveals that share prices of seven companies do not follow random walk.

Semi-strong form efficiency is an aspect of the Efficient Market Hypothesis (EMH) that assumes that current stock prices adjust rapidly to the release of all new public information.

The semi-strong form efficiency theory follows the belief that because all information that is public is used in the calculation of a stock's current price, investors cannot utilize either technical or fundamental analysis to gain higher returns in the market.

Explanation: As the fundamental analysis gives the abnormal returns over a long period of time, then it is the semi-strong form of efficiency.

How Does Semi-Strong Form Efficiency Work? Semi-strong form efficiency suggests that prices change to equilibrium levels, which are as a result of public market information on any security or equity. This theory analyses how the price of stocks increase and decrease with the presence of publicly available information.

Weak form of EMH is tested using the Kolmogorov-Smirnov goodness of fit test, run test and autocorrelation test. The K-S test result concludes that in general the stock price movement does not follow random walk. The results of the runs test reveals that share prices of seven companies do not follow random walk.

The strong form tests imply that no market participant can enjoy excess trading profits due to monopolistic access to information,and in addition that all analysis is useless. The testing of this statement is based on different investment groups that may have access to important private information.