AI Article Synopsis

  • The study analyzes how financial time-series data reveals distinct patterns in company relationships before, during, and after the COVID-19 lockdown, highlighting a reduction in connections during the lockdown and a fragmentation of the market during recovery.
  • The emergence of faction groupings among companies during the recovery phase indicates stronger internal couplings, a trend not observed prior to the lockdown, with significant roles played by companies from China and Japan in global financial dynamics.
  • It was found that the recovery phase's dynamics are largely driven by the financial sector, with two different groups of companies forming across economies, while US and European firms appear to insulate themselves from local market influences.

Article Abstract

We show that inner composition alignment networks derived for financial time-series data, studied in response to worldwide lockdown imposed in response to COVID-19 situation, show distinct patterns before, during and after lockdown phase. It is observed that significant couplings between companies as captured by inner composition alignment between time series, reduced considerably across the globe during lockdown and post-lockdown recovery period. The study of global community structure of the networks show that factions of companies emerge during recovery phase, with strong coupling within the members of the faction group, a trend which was absent before lockdown period. The study of strongly connected components of the networks further show that market has fragmented in response to COVID-19 situation. We find that most central firms as characterized by in-degree, out-degree and betweenness centralities belong to Chinese and Japanese economies, indicating a role played by these organizations in financial information propagation across the globe. We further observe that recovery phase of the lockdown period is strongly influenced by financial sector, which is one of the main result of this study. It is also observed that two different group of companies, which may not be co-moving, emerge across economies during COVID-19. We further notice that many companies in US and European economy tend to shield themselves from local influences.

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Source
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC9707026PMC
http://dx.doi.org/10.1016/j.physa.2022.128341DOI Listing

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