Analysis of Stock Market Returns Based on A Wave Function

This paper establishes the wave function model for the rate of stock market returns, and gives out the distribution function of the rate of stock market returns by using the historical data of Shanghai Stock Exchange(SSE) Composite Index. The distribution function exhibits strong compatibility with the returns earned on the SSE. This demonstrates that the principle from quantum mechanics can be applied to stock market at some aspect. The distribution function shows that the returns is highly leptokurtic, fat-tail, and asymmetric. Moreover, compared with the London market, the Shanghai market has higher returns, but also exists greater risk. This shows that the Chinese stock market is speculative and risky at the same time, and also shows that the economic situation of China is good, but the stability of stock markets still needs to be strengthened.