Research on the Relationship between Stock Price and Financial Indicators using Ordinary Least Squares Model

Understanding the association between stock price and financial indicators is important. After summarizing the directions of previous research, collecting data from Yahoo Finance and the basic information of Inner Mongolia Yili Industrial Group Co., Ltd. in the investor relations module of its official website and exploring the correlation between explanatory variables, this paper uses OLS Model to give an insight into the correlation between stock price and financial indicators. This paper not only confirms independence between each explanatory variable as well as the robustness of the model, but also proves the parsimony of the OLS model and the fitness between the model and the data. Based on the results of this study, it can be inferred that ITO and net asset growth rate are primary determinants of stock prices, while Equity Ratio and the net asset value per share do not make a remarkable effect. In conclusion, studying the relationship between stock price and financial indicators, the paper gains insights into financial markets and can help stakeholders make more informed decisions in the increasingly complex world of finance.