Concepts from Statistical Control Theory
Outside of the realm of systems and trading, there is a whole discipline devoted to monitoring and maintaining quality control over manufacturing outputs. This pic was borrowed from the original post http://www.shmula.com/241/statistical-process-control-why-you-should-care. Im sure a picture in this case is worth a thousand words—or ideas!
Below is a general guideline for interpreting a Control Chart:
Read More: http://www.shmula.com/241/statistical-process-control-why-you-should-care#ixzz0qEYuybKU
Posted on June 8, 2010, in Uncategorized. Bookmark the permalink. 1 Comment.
I wonder what kinds of distributions they are actually monitoring. I grew up 60 miles south of Chernobyl… not sure if they’ve compiled a control chart for the black swan formation:
http://bigpicture.typepad.com/comments/2008/06/uh-oh-dangerous.html