RUN TEST WITH INTERVAL OR RATIO SCALE MEASUREMENT

RUN TEST

Run Test with Interval or Ratio Scale Measurement

CASE ANALYSIS – 1


PROBLEM

A study is conducted to test the randomness of the sample stock prices as given below.

Table-1: Input Data

Null hypothesis-H0: The stock price is random in nature.

Alternative Hypothesis- H1: The stock price is not random

Performing the Analysis with SPSS

For SPSS Version 11, click on Analyze ⇒ Nonparametric Tests ⇒ Runs

This will bring up the SPSS screen dialogue box as shown below.

After clicking Runs, this will bring up the SPSS screen dialogue box as shown below.

Select the variable and move it to Test Variable List box and click Mean.

Finally click OK.

SPSS Output

The SPSS outputs are given in following tables.

Table-2: Runs Test

                             a Mean

From the output, Z = -2.86

DECISION

Reject the null hypothesis if p-value (Sig. (2-tailed)) ≤ 0.05

INTERPRETATION

The p-value is 0.004 and it is less than 0.05 (5% level of significance), so we reject the null hypothesis and accept the alternative hypothesis. The randomness of the sample is therefore rejected.

SPSS Command (Interval or Ratio Scale Measurement)

  1. Click on ANALYZE at the SPSS menu bar (in older versions of SPSS, click on STATISTICS instead of ANALYZE.
  2. Click on NON-PARAMETRIC TEST followed by
  3. Select the concerned numeric variable and move it to TEST VARIABLE LIST box.
  4. Click MEAN or MEDIAN depending on the desired cut-off value.
  5. Click OK of the main dialogue box.

2 thoughts on “RUN TEST WITH INTERVAL OR RATIO SCALE MEASUREMENT”

  1. How randomness is defined in run test with interval scale/ratio scale measurement? I mean to ask, if data are nonrandom as evident from the result, then,
    can we predict future stock prices using the present data series?

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