Who is Avon’s target market? How can it be segmented?
Case Study
Measuring Systematic Risk
For the first chart, we can measure the systematic risk. Systematic risk is defined as the risk that cannot be diversified away. The systematic risk of an individual asset is really just a measure of the relation between the returns on the individual asset and the returns on the market.
Now, we draw a 45o line across the origin as the picture. The the line shows the company’s performance when the measure stay at the same systematic risk as market. From this chart, we can see the points above the line are less than the points under the line and most of the points under the line are close to the line. Therefore, we can get that at the same systematic risk as market, if we invest this company, we will have a higher risk to lose our money but we have a big chance to lose a little percent. If we earn money, we will earn more percent of money.
All in all, I tend to invest into this company. Because though we have a little higher chance to lose, we can not lose so much. But if we earn the money, we will earn more. Therefore, I think it is a stable company.
Forecast Error
In statistics, a forecast error is the difference between the actual or real and the predicted or forecast value of a time series or any other phenomenon of interest.
Forecast error can be a calendar forecast error or a cross-sectional forecast error, when we want to summarize the forecast error over a group of units. If we observe the average forecast error for a time-series of forecasts for the same product or phenomenon, then we call this a calendar forecast error or time-series forecast error. If we observe this for multiple products for the same period, then this is a cross-sectional performance error. Reference class forecasting has been developed to reduce forecast error. Combining forecasts has also been shown to reduce forecast error.
In these two chart, they shows the error on mean squared return and mean
Measuring Systematic Risk
For the first chart, we can measure the systematic risk. Systematic risk is defined as the risk that cannot be diversified away. The systematic risk of an individual asset is really just a measure of the relation between the returns on the individual asset and the returns on the market.
Now, we draw a 45o line across the origin as the picture. The the line shows the company’s performance when the measure stay at the same systematic risk as market. From this chart, we can see the points above the line are less than the points under the line and most of the points under the line are close to the line. Therefore, we can get that at the same systematic risk as market, if we invest this company, we will have a higher risk to lose our money but we have a big chance to lose a little percent. If we earn money, we will earn more percent of money.
All in all, I tend to invest into this company. Because though we have a little higher chance to lose, we can not lose so much. But if we earn the money, we will earn more. Therefore, I think it is a stable company.
Forecast Error
In statistics, a forecast error is the difference between the actual or real and the predicted or forecast value of a time series or any other phenomenon of interest.
Forecast error can be a calendar forecast error or a cross-sectional forecast error, when we want to summarize the forecast error over a group of units. If we observe the average forecast error for a time-series of forecasts for the same product or phenomenon, then we call this a calendar forecast error or time-series forecast error. If we observe this for multiple products for the same period, then this is a cross-sectional performance error. Reference class forecasting has been developed to reduce forecast error. Combining forecasts has also been shown to reduce forecast error.
In these two chart, they shows the error on mean squared return and mean