TAKING ADVANTAGE OF THE LOCAL ADVANTAGE? - Investment value of the analyst local advantage in the Finnish stock market in 2006–2014

An investor can either conduct independent analysis or rely on the analyses of others. Stock analysts provide markets with expectations regarding particular securities. However, analysts have different capabilities and resources, of which investors are seldom cognizant. The local advantage refers to the advantage stemming from cultural or geographical proximity to securities analyzed. The research has confirmed that local agents are generally more accurate or produce excess returns. This thesis tests the investment value of the local advantage regarding Finnish stocks via target price data. The empirical section investigates the local advantage from several aspects. It is discovered that local analysts were more focused on certain sectors generally located close to consumer markets. Market reactions to target price revisions were generally insignificant with the exception to local positive target prices. Both local and foreign target prices were overly optimistic and exhibited signs of herding. Neither group could be identified as a leader or follower of new information. Additionally, foreign price change expectations were more in line with the quantitative models and ideas such as beta or return mean reversion. The locals were more accurate than foreign analysts in 5 out of 9 sectors and vice versa in one. These sectors were somewhat in line with coverage decisions and buttressed the idea of local advantage stemming from proximity to markets, not to headquarters. The accuracy advantage was dependent on sample years and on the measure used. Local analysts ranked magnitudes of price changes more accurately in optimistic and foreign analysts in pessimistic target prices. Directional accuracy of both groups was under 50% and target prices held no linear predictive power. Investment value of target prices were tested by forming mean-variance efficient portfolios. Parallel to differing accuracies in the levels of expectations foreign portfolio performed better when short sales were allowed and local better when disallowed. Both local and non-local portfolios performed worse than a passive index fund, albeit not statistically significantly. This was in line with previously reported low overall accuracy and different accuracy profiles. Refraining from estimating individual stock returns altogether produced statistically significantly higher Sharpe ratios compared to local or foreign portfolios. The proposed method of testing the investment value of target prices of different groups suffered from some inconsistencies. Nevertheless, these results are of interest to investors seeking the advice of security analysts.

Jätevesien puhdistus jätevesialtaissa jäädyttämällä - Kartoitus potentiaalisista sovellutuksista Suomessa

Uusia jäteveden puhdistusprosesseja kartoitetaan Suomessakin esimerkiksi kiristyvien päästömääräyksien vuoksi sekä parempia kustannus- ja energiatehokkuuksia tavoiteltaessa. Jätevesien puhdistus on Suomessa jo nykyään hyvällä tasolla, mutta muun muassa raskasmetallien, torjunta-aineiden, hormonien ja lääkeaineiden pitoisuuksien kasvut jätevesissä asettavat haasteita nykyisin käytössä oleville jäteveden puhdistusmenetelmille, sillä niitä ei ole suunniteltu näiden aineiden talteenottoon ja suurin osa aineista jää veteen. Lisäksi jätevedet halutaan nähdä enemmänkin resurssina kuin jätteenä, josta voidaan ottaa talteen hyödyllisiä komponentteja, kuten suoloja. Alueilla, joissa vuorokauden keskilämpötila pysyttelee edes osan vuodesta pakkasella, veden luonnollista jäätymisprosessia voidaan käyttää hyväksi jäteveden puhdistuksessa. Tässä työssä selvitettiin kiteytymisen teorian ja aikaisempien tutkimusten avulla, millaisten jätevesien puhdistukseen jäädytyskiteytys sopii sekä pohdittiin menetelmän potentiaalisia sovelluskohteita Suomessa. Jäädytyskiteytyksen todettiin olevan turvallinen ja energiatehokas ratkaisu monien koostumukseltaan erilaisien jätevesien puhdistukseen. Menetelmällä voitaneen puhdistaa öljyisiä, orgaanisia ja/tai epäorgaanisia epäpuhtauksia tai raskasmetalleja sisältäviä sekä myrkyllisiä jätevesiä. Olosuhteet prosessille ovat parhaat Pohjois-Suomessa, jossa vuorokauden keskilämpötila pysyttelee nollan alapuolella noin seitsemän kuukautta vuodesta. Etelä-Suomessa vastaava luku on kolme. Menetelmän potentiaalisia sovelluskohteita ovat esimerkiksi kaivosteollisuuden ja kaatopaikkojen jätevedet, joiden puhdistukseen jäädytyskiteytys saattaisi soveltua erinomaisesti. Jäädyttämällä voitaisiin myös puhdistaa tekstiili- ja nahkateollisuuden jätevesiä, sillä niiden sisältämien väriaineiden erottaminen vedestä on perinteisillä jäteveden puhdistusmenetelmillä usein vaikeaa tai jopa mahdotonta. Suolojen kiteyttämiseen vaadittavia korkeampia suolapitoisuuksia todettiin löytyvän lähinnä membraaniprosessien, kuten käänteisosmoosin, rejektivesistä. Sopivimmat eutektiset olosuhteet kiteyttämiseen ovat natriumsulfaatilla, kaliumsulfaatilla ja natriumkarbonaatilla. Veden luonnollisen jäätymisprosessin hyödyntäminen jätevedenpuhdistuksessa on huomionarvoinen idea. Prosessin käyttöönottoa haittaavat esimerkiksi korkeat investointikustannukset, mutta ne tulevat todennäköisesti ajan myötä teknologian kehittyessä laskemaan. Lisäksi monet prosessiin liittyvät käytännön asiat ovat vielä tutkimuksen alla. On myös huomattava, että Suomessakaan lämpötila ei pysyttele koko vuotta pakkasella, joten jäädytyksen rinnalla on oltava jokin toinen prosessi, jolla jätevedet puhdistetaan lämpötilan ollessa nollan yläpuolella.

TAKING ADVANTAGE OF THE LOCAL ADVANTAGE? - Investment value of the analyst local advantage in the Finnish stock market in 2006–2014

An investor can either conduct independent analysis or rely on the analyses of others. Stock analysts provide markets with expectations regarding particular securities. However, analysts have different capabilities and resources, of which investors are seldom cognizant. The local advantage refers to the advantage stemming from cultural or geographical proximity to securities analyzed. The research has confirmed that local agents are generally more accurate or produce excess returns. This thesis tests the investment value of the local advantage regarding Finnish stocks via target price data. The empirical section investigates the local advantage from several aspects. It is discovered that local analysts were more focused on certain sectors generally located close to consumer markets. Market reactions to target price revisions were generally insignificant with the exception to local positive target prices. Both local and foreign target prices were overly optimistic and exhibited signs of herding. Neither group could be identified as a leader or follower of new information. Additionally, foreign price change expectations were more in line with the quantitative models and ideas such as beta or return mean reversion. The locals were more accurate than foreign analysts in 5 out of 9 sectors and vice versa in one. These sectors were somewhat in line with coverage decisions and buttressed the idea of local advantage stemming from proximity to markets, not to headquarters. The accuracy advantage was dependent on sample years and on the measure used. Local analysts ranked magnitudes of price changes more accurately in optimistic and foreign analysts in pessimistic target prices. Directional accuracy of both groups was under 50% and target prices held no linear predictive power. Investment value of target prices were tested by forming mean-variance efficient portfolios. Parallel to differing accuracies in the levels of expectations foreign portfolio performed better when short sales were allowed and local better when disallowed. Both local and non-local portfolios performed worse than a passive index fund, albeit not statistically significantly. This was in line with previously reported low overall accuracy and different accuracy profiles. Refraining from estimating individual stock returns altogether produced statistically significantly higher Sharpe ratios compared to local or foreign portfolios. The proposed method of testing the investment value of target prices of different groups suffered from some inconsistencies. Nevertheless, these results are of interest to investors seeking the advice of security analysts.