Hi there,
I used the rolling regression with window 12 months to calculate expected Beta and then I calculate expected returns. After that, I calculate abnormal returns = Real returns - Expected returns.
My codes is as the following:
asreg excessR MarpreCSI SmB HmL MOM , wind( Month 12)
gen expectedALPHA4= Riskfreerate3monthdeposit + _b_MarpreCSI * MarpreCSI +_b_SmB * SmB + _b_HmL * HmL +_b_MOM * MOM
gen ALPHA4= rp- expectedALPHA4
and I also calulate the residuals as:
gen resid4= excessR - _b_cons - _b_MarpreCSI * MarpreCSI - _b_SmB * SmB - _b_HmL * HmL - _b_MOM * MOM
So, I wonder my code is correct or not?
Thank you in advance!
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