Welcome to the second part of the Basic Concepts that is necessary for our Blog-Series. In this part, we will enhance the concept of spaces, introduce instruments to measure, and add probabilities to elements of spaces. Moreover, most importantly, we will start with the main question:
What is a Stochastic Process?
Overview of Spaces
Before the topics of our blog-series can be presented, it is a necessity to present a minimum of basic and underlying concepts used throughout the whole series. The goal is not to take every detail, proof or kinky speciality of the former concepts into consideration, but to create a brief understanding of the process.
In our digitally and mathematically dominated world Time-Series-Modelling is an indispensable subject in many areas (e.g. in Quantitative Financial Analysis, Financial Mathematics, Blockchain & Cryptocurrencies as well as applied Risk Management). To analyze time-series in an adequat manner, more and more frequently Stochastic Differential Equations (SDE) are utilized. (Oksendal, 2013).
To prepare such an exciting though complex area in a "reader-friendly" manner, I have decided to write a whole series of articles about the presented topic (these articles will be found in the blog using the appreviation "SDE" and the presented subject).