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©2019 by datascienceinvestor

COVID-19: Will the market behave the same this time round?- Part 2

Updated: 2 days ago

This is a continuation blog post from Part 1.

In the last few days, I decided to do a deeper dive into the data and statistics of SARS to see if we can get any meaningful insights from it to better prepare us for this Wuhan novel coronavirus.

As such, I begin to extract data from WHO (World Health Organization) website to extract the daily statistics (no of cases, no of deaths etc). The WHO website covers bulk of such daily statistics during the peak period of SARS (17 March 2003 to 11 July 2003)

Using these data during the SARS period, I first plot the graph of the number of cases against the date to have a better idea of how the number of cases increases and eventually stagnate.

I then decided to compare it against Hang Seng Index during the same period.

Hmmm, still doesn't tell much isn't it?

How about let's take the percentage increase of cases per day instead of using the total number of cases? For eg, if there are 16 cases today and 8 cases yesterday, the percentage increase for today as compared to yesterday will then be 100%.

Here is a snapshot of the data table.

Now, let's try to plot this and compare to the HSI.

There is a huge spike on 26 Mar 2003 where the number of cases is more than 1.5 times as compared to the day before. Here is a historical fact: Schools in Singapore are closed on 27 Mar 2003, a day after such a spike happen on 26 Mar 2003.

Now, let's concentrate on the data after 26 March so that we can have a better scale of the percentage increase in cases per day against the dates.

We can start to see some trends here. As the percentage increase in cases per day begin to drop, the HSI also begin its recovery as you can see in the highlighted red box.

Now, you can see that there are big swings in some parts of the graph. This is due to big swings in the percentage increase in cases per day during the early days in this period. Hence, in order to have a better idea of how the trend of the percentage increase in cases per day, I decided to use Simple Moving Average of the percentage increase in cases per day over a period of 5 days instead.

Here is a snapshot of the data table with the Simple Moving Average (5 days) included.

Now, let's try to plot this and compare to HSI again.

This graph now provides a better insights on how bad the SARS outbreak was like on a daily basis based on how fast the number of cases are increasing on an average basis across a 5 days period. Similar to the other graph, you can see that the outbreak begin to show signs of stabilisation somewhere in nearly May. That would have been a good entry point to start buying as that is also when the Hang Seng Index begins to recover.

Back to the current situation we have now, could we have utilise these new-found information to aid us during the current outbreak of Wuhan novel coronavirus?

As it stands now, the spread of Wuhan novel coronavirus exceed that of SARS back in 2003. We are looking at double digits percentage increase in the number of cases per day since 21st January. I do think that we are still at the early stages of this pandemic. From an investing point of view, it is good to stay away from the market for now. Keep your war chest first and only deploy it at a later stage when the situation shows signs of recovering. Of course, this is just my personal take and you are welcomed to debate on it.

(If you still insist on buying something in this current market, you might like to take a look at Silver as the Gold/Silver ratio is now approaching 90 which is very high by historical standards- this will be discussed in a separate post)

More importantly than investing, please ensure that you keep yourself safe by practicing good hygiene and keep a lookout on the news for the latest status. A team in John Hopkins Center for Systems Science and Engineering recently build an excellent dashboard showcasing the latest statistics for this outbreak together with some visual aids to keep the public informed and better understand the spread of the disease globally in different geographical locations. You may find it here.

More updates will follow as the situation continues. Do scroll down and subscribe to get the latest updates.