Asian Basic and Applied Research Journal

Stock trend analysis plays an important role in practical stock trading. One of the best options is to choose stocks by fundamental analysis and then confirm when to buy and sell stocks by technical analysis, hence the need for stochastic analysis through the appropriate model. A model which fits stock price movements was examined for future investment plans since each independent finite state communicates. To be precise, this paper considered the Markov chain model to study Oando and Dangote stock prices, which shows the 3-steps probability transition matrices and predicts different stock movements in finite state. Furthermore, comparisons were made for Oando and Dangote whose criteria were based on minimum stock prices and it shows as follows: Oando has two possible probability of reducing in price in the near future; Oando has three possible probabilities of increasing in the near future; Oando has two probabilities of no-change in price; The mean and standard deviation of each set of transition probability were also considered which gave good explanation and more insight against investment plans for Oando and Dangote stock price future plans. Results show that the mean of Dangote is higher than the mean of Oando, indicating that traders are bullish on the security, while Oando’s high standard deviation indicates that the stock prices are more volatile. It is, therefore, recommended that introducing control parameters in studying Oando and Dangote stock price movements will be a very good area to explore.