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VOL. 7, ISSUE 2 (2025)
Exploration of global stock markets correlations across twenty-two economies during pre-financial crisis period
Authors
Dr. Siddhartha Sankar Saha, Rapti Deb
Abstract
As global financial systems become increasingly interconnected,
understanding the linkages between Indian stock indices and international
markets has become vital for investors aiming to navigate and capitalize on
evolving market dynamics. The study delves into the intricate dynamics among
India’s S&P BSE SENSEX and 21 prominent stock indices from Asia, America,
and Europe over the period spanning June 3, 2003, to August 2, 2007. Utilizing
descriptive statistical analysis of the calculated return series derived from daily
adjusted index closing values, alongside the non-parametric Spearman Rank
Correlation method, the research provides an exhaustive exploration of global
market correlation. The findings reveal weak correlations between the S&P
BSE SENSEX and sample global indices, underscoring India’s limited financial
integration with international markets and its significant potential for
portfolio diversification. In contrast, moderate correlations among American
and European indices signal sensible regional association, reflecting shared
economic frameworks and suggesting constrained diversification opportunities
within these regions. The analysis further highlights heterogeneous financial
interdependency, with India’s S&P BSE SENSEX maintaining a distinctive
detachment from American and European indices, underscoring unique market
dynamics. Asian markets exhibit moderate intra-regional cohesion and selective
global linkages, whereas European indices demonstrate robust interdependence,
indicative of cohesive economic and financial policies. Notably, China’s SSE
emerges as minimally integrated, while select transcontinental relationships,
such as between Mexico’s IPC and the Netherlands’ EURONEXT 100, underscore
targeted global interdependencies. This nuanced examination sheds light on the
structural and regional factors shaping global financial integration.
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Pages:41-48
How to cite this article:
Dr. Siddhartha Sankar Saha, Rapti Deb "Exploration of global stock markets correlations across twenty-two economies during pre-financial crisis period". International Journal of Commerce and Economics, Vol 7, Issue 2, 2025, Pages 41-48
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