Why Econophysics?

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Econophysics is the interdisciplinary science where physicists try to adapt mathematical theories from physics to economics and financial markets. This is an attempt to apply models used in physics to finance - especially to the financial markets.

There is a huge number of models in physics and applied mathematics which exhibit parallels to phenomenon seen in financial markets. In particular financial markets seem to be largely random, but also appear to have some possibly exploitable time structure. Simple methods to identify time structure, such as the Fourier analysis or ARIMA type models perform poorly. This has led researchers to apply more powerful techniques that can handle non-stationarity (eg Wavelet analysis). A primary reason why these models perform poorly is the non-stationarity of financial series. In addition financial returns have distributions which are not Normal: high frequency financial data is characterized by power law distributions in the tails: extreme moves, beyond 3 standard deviations, are seen.

The anticipation of large financial price changes is extremely important for money management. For this reason some investigation of models which show phase transition or mode switching seems to perhaps better reflect financial market behaviour. Some application of the deterministic chaotic models, or – more generally recovery the nonlinear map of the generating process show apparent parallels between phenomenon in the physical world and behaviours seen in financial markets.

As it has been observed, the world economy is composed of individual participants (the economy of particular countries, market participants, etc) and can be compared to a system of many bodies (electrons, liquid molecules) that effect each other. The statistical, quantum physics methods that describe the behaviour of many bodies systems can provide answers that until know were unaddressed in the traditional economy.

The latest achievements in physics together with the modern tools used for statistical analysis and the available IT instruments will enable us to better understand these issues. Although we cannot foresee the future, we believe that the research conducted by the Econophysics will help understand the rules of such complex systems as the economy or the financial markets.

Joining us you can either choose studies which will provide a Bachelor’s diploma or a Master of science diploma. The obtained knowledge will make you a perfect candidate for senior positions in banking & finance, insurance, public administration, industry and the service sector. You will be able to carry out tasks related with risk management in financial institutions, quality management and security, statistical analysis, organisations of auctions and bids, preparation and carrying out procedures in crisis situations.

University of Silesia
Institute of Physics
Katowice, Poland