I've got a code that works with the Data Set. I found out that it doesn't want to work with the ln(x) function. The data set can be found here.

LY <- ln(Apple$Close - Apple$Open)

Warning in log(x) : NaNs produced

Could you please help me to fix this problem?

CodePudding user response：

Since stocks can go down as well as up (unfortunately), Close can be less than Open and Close - Open can be negative. It just doesn't make sense to take the natural log of a negative number; it's like dividing by zero, or more precisely like taking the square root of a negative number.

Actually, you can take the logarithm of a complex number with a negative real part:

log(as.complex(-1))
## [1] 0 3.141593i

... but "i times pi" is probably not a very useful result for further data analysis ...

(in R, log() takes the natural logarithm. While the SciViews package provides ln() as a synonym, you might as well just get used to using log() - this is a convention across most programming languages ...)

Depending on what you're trying to do, the logarithm of the close/open ratio can be a useful value (log(Close/Open)): this is negative when Close < Open, positive when Close > Open). As @jpiversen points out, this is called the logarithmic return; as @KarelZe points out, log(Close/Open) is mathematically equivalent to log(Close) - log(Open) (which might be what your professor wanted ... ???)

CodePudding user response：

Are you looking for logarithmic return? In that case the formula would be:

log(Apple$Close / Apple$Open)

Since A / B for two positive values is always positive, this will not create NaNs.