# Accuracy formula

Posted by Tan Le on September 14, 2001 12:30 AM

Hi all,

I have a non-excel question but I think you guys, the floating point guru, can lead me to the better answer.

Given: a stock price is closed at 10 USD. I predict that in 1 week (5 trading days) that it will be 13 USD. My friend predicts higher than my guess. He thinks that it will go to 15 USD. But after one week, the price was closed at 14 USD.

Question: If you let either one of us know who is more accurate in predicting the future price in 1 week, who would that be? Given that both of us hit within plus and minus 1 unit of 14 USD. But my guess is lower and his is higher. My guess is the accuracy formula is the ratio of guess over actual? What do you think? How about the momentum of the guess, does that affect the accuracy percentage? If I guessed the price to be 14 USD and it closed at 14 after 1 week, then the ratio is 1. That's 100%. Had I guessed it to be 12 and closed at 14, my accuracy is 85%? That does not sound right. Maybe I am wrong. Also, for overguessing versus underguessing, which one is usually more favored in real world?

I sincerely appreciate your input as many as possible.

Tan Le