Now I the next step we analyze the residuals, conditional standard deviations and returns and as required Figure.5.5 shows the relationship between the innovations (i.e., residuals) derived from the fitted model (i.e., GARCH (1,1)), the corresponding conditional standard deviations, and the observed returns for BASF

Figure.5.5. Innovations, Conditional Standard Deviations, and Returns of BASF.