Stock index is short for stock price index, and stock price index is stock index. It is a reference index compiled by stock exchanges or financial services institutions to indicate changes in the stock market. Due to the volatility of stock prices, investors are bound to face market price risks. It is easy for investors to know the price changes of a specific stock, but it is neither easy nor annoying to know the price changes of various stocks one by one. In order to adapt to this situation and need, some financial service institutions make use of their professional knowledge and the advantages of being familiar with the market to compile stock price indexes and publish them publicly as indicators of market price changes. Based on this, investors can test the effect of their investment and predict the trend of the stock market.

The stock price index is generally compiled and published by stock exchanges, financial service institutions, consulting and research institutions or news organizations. The compiling steps are as follows:

(1) According to the industry distribution, economic strength, credit rating and other factors of listed companies, select an appropriate number of representative stocks as sample stocks for compiling the index, which can be changed or increased at any time to maintain good representativeness.

(2) Collect the prices of sample stocks in the stock market on schedule, which is referred to as sampling. The time interval adopted depends on the preparation cycle of the stock price index. In the past, the stock price index was mostly compiled on a daily basis, and the sampling price was the closing price at the close of each trading day. The compilation period of stock price index is shortened day by day, from "day" to "hour" and then to "minute", and the sampling frequency is changed from once a day to continuous sampling all day. The sampling price has also developed from a single closing price to the latest transaction price at all times or the average price at a certain time. Generally speaking, the shorter the preparation period, the more sensitive the stock price index is, and the more timely it can reflect the fluctuation of stock price.

(3) Using scientific methods and advanced means to calculate the index value. The calculation methods of stock price index mainly include summation method, simple average method and synthesis method. Computer technology has been widely used. In order to improve the accuracy and sensitivity of stock price index, we must seek the support of scientific calculation methods and advanced calculation technology.

(4) release to the public through the news media. In order to keep the continuity of stock index and make the stock index calculated in different periods comparable, it is sometimes necessary to adjust the index value accordingly.

The stock price index is a fixed base index, which is based on a specific year or date (the stock price level in the base period is 100), and the percentage rate calculated by comparing the stock price level in the reporting period with the stock price level in the base period is expressed as a percentage or percentage point. In order to avoid the calculation trouble caused by the large span between the reporting period and the base period, the stock price level in the reporting period is often compared with the stock price level in the previous period to obtain the ring index, and then the ring index is obtained by ring comparison.

Stock price index in the reporting period (fixed base index) = previous price index (fixed base index) x number of stock prices in the reporting period (ring index)

This method of finding stock price index is called sequence method. When the index value of the report needs to be adjusted after changing the sample or base period, it can also be traced back from the new base period to the old base period in this way to maintain the comparability of the stock price index.