  The stock market has been known to form homogeneous stock groups with a
higher correlation among different stocks according to common economic factors
that influence individual stocks. We investigate the role of common economic
factors in the market in the formation of stock networks, using the arbitrage
pricing model reflecting essential properties of common economic factors. We
find that the degree of consistency between real and model stock networks
increases as additional common economic factors are incorporated into our
model. Furthermore, we find that individual stocks with a large number of links
to other stocks in a network are more highly correlated with common economic
factors than those with a small number of links. This suggests that common
economic factors in the stock market can be understood in terms of
deterministic factors.
