Advanced
Increase Your Knowledge
Beta is a measure of volatility of an asset compared to the market (usually the KSE – 100 index) as a whole. Stocks with a beta of more than 1.0 can be interpreted as more volatile than the KSE – 100, and vice versa.
CAGR, or compound annual growth rate, is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investments life span.
Enterprise value is a measure of a company’s value and can be calculated as the sum of the market capitalization and debt minus cash & equivalents.
The book value of a company is the difference between its assets and liabilities, and represents the total value of a company’s assets that shareholders would receive in case of bankruptcy. An asset’s book value is its carrying value on the balance sheet.
The debt to equity ratio can be calculated by dividing a company’s total liabilities by its shareholder equity. It is an indicator of the company’s reliance on debt. A high D/E might indicate more risk, while a lower one may indicate a suboptimal capital structure.
Working capital is the amount of capital that is available to use for a business, for their daily operations. It is calculated as current assets minus current liabilities.
The Sharpe ratio is a tool used for performance measurement of a portfolio. It is calculated as the average return earned in excess of the risk free rate per unit of total risk. A high Sharpe ratio is good when compared to similar portfolios with lower returns.
Fill or Kill Order (FOK) is a type of order used in stock trading to execute a transaction immediately and completely, or not at all. This order must be filled completely at the specified price, or else are cancelled.
A market if touch order is a conditional order that becomes a market order when the stock reaches a specified price. These are typically used to buy when the price is falling or sell when the price is rising.
Correlation is statistic that measures the degree to which two variables move in relation to each other. In investments, correlation can measure the strength of the relationship between a stock and index. A positive correlation between a stock and an index means the stock will likely rise in response to an increase in the index.
The relative strength index (RSI) is a momentum indicator used in technical analysis, and provides traders with signal about bullish or bearish price momentum. A stock is generally considered overbought when the RSI is above 70 and oversold when it is below 30.
