Market anomaly
A market anomaly (or market inefficiency) is a price and/or rate of return distortion on a financial market that seems to contradict the efficient-market hypothesis.[1][2]
The market anomaly usually relates to:
- Structural factors, such as unfair competition, lack of market transparency, regulatory actions, etc.
- Behavioral biases by economic agents (see behavioral economics)
- Calendar effects, such as the January effect.
There are anomalies in relation to the economic fundamentals of the equity, technical trading rules, and Economic Calendar events.
Anomalies could be fundamental,[3] technical, or calendar related. Fundamental anomalies include value effect, small-cap effect (low P/E stocks and small cap companies do better than index on an average) and the Low-volatility anomaly. Calendar anomalies involve patterns in stock returns from year to year or month to month, while technical anomalies include momentum effect.
References
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