Using the Harmonic
Mean (Pythagorean Means), we focus on "three values" using the Cross Ladder Problem by drawing the geometric
shape - vectored R/S points. These values are taken from the harmonic
mean of "B" "A" "h". The calculation inputs are Log Normal, Exponential, and Skewness. (Arithmetic mean gives higher data points that will error your weight); Harmonic
Mean gives equal weight to each data point. This is in part; a computation set in our Optimal Geo-Ratio (OG) Model. One would want to incorporate the Intrinsic/Time Value to carry out the time horizon price target. We typically apply the STDEV*SQRT(45 days/252) equation to the two outcomes. You may use a short cut divisor 1/16 per incremental price input for jump diffusion if preferred, integrated with a Beta stochastic volatility
model. Square Time Value and Excess Kurtosis
are not shown in this example.
Just remember volatility
is the standard deviation of expected returns. Volatility
is proportional not directional. Peace.