The stock index is the stock price index. It is a reference index compiled by stock exchanges or financial services institutions to indicate changes in the stock market. Because of the volatility of stock price, investors are bound to face market price risk, and the macro-market environment has greater influence on investors than a single stock price. 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 a stock price index, which is publicly released as an indicator of market price changes. Based on this, investors can test the effect of their investment and predict the trend of the stock market. With the rise of passive investment, stock index has been paid more and more attention, and some important indexes have become a barometer of a country's political economy.
The index is a comprehensive reflection of the market. Generally speaking, it has the following three functions: 1. An indicator that reflects the overall price of the stock market or the changes and trends of a certain type of stock. Different stock markets, different asset classes and different industries can almost find corresponding indexes. 2. In order to provide a "benchmark return" for investment in the stock market, Public Offering of Fund generally takes one index or a combination of several indexes as its performance comparison benchmark. 3. Index derivatives and the basis of financial innovation. For example, China's 50ETF option is based on the SSE 50 Index.
To compile a stock index, we must first set an initial comparison starting point, calculate the sample stocks included in the index, and set an initial index point, for example, the Dow Jones index is 40.94, the Shanghai Composite Index is 100, and the Shenzhen Stock Exchange Index is 1000. Then the current point can be obtained by dividing the overall price change by the base point. Investors can judge the changing trend of a basket of stock prices contained in the index according to the rise and fall of the index. Now all the indexes change synchronously with the share prices of the stocks they contain, so we can judge the market situation in real time.
There are three factors to be considered in calculating the stock index: first, sampling, that is, extracting a few representative constituent stocks from many stocks; The second is weighted, weighted average by unit price or total value, or unweighted average; The third is a calculation program, which calculates arithmetic average, geometric average, or considers price and total value.
When calculating the stock index, the stock index and the average price of the stock are often calculated separately. By definition, the stock index is the average share price. However, as far as their actual impact on the stock market is concerned, the average share price is an overall level reflecting the changes of various stock prices, which is usually expressed as an arithmetic average. By comparing the average stock prices in different periods, people can know the changes of various stock prices. Stock index is a relative index that reflects the changes of stock prices in different periods, that is, the percentage of the average stock price in the first period as the benchmark of the average stock price in another period. Through the stock index, people can know the percentage of stock price rising or falling relative to the base stock price during the calculation period. Because the stock index is a relative index, it can measure the change of stock price more accurately than the average stock price in a long period of time.
1. Calculation of average stock price: (1) Simple arithmetic of average stock price, (2) correction of average stock price, and (3) weighted average stock price.
2. Calculation of stock index: (1) relative method, (2) comprehensive method and (3) weighting method.