# AI For Trading: Stocks,indices,Funds (33)

## Stocks

Equity = Assets - Liabilities
Stock or Shares represent partial ownership of a company’s equity.

## Indices(指数)

What is an index?
Aggregated value of a group of stocks company's equity.

S&P: Standard and Poor’s 500 Index (USA)

Dow: Dow Jones Industrial Average (USA)

IBOVESPA: Ibovespa Brasil Sao Paulo Stock Exchange Index (Brazil)
IBOVESPA：Ibovespa Brasil圣保罗证券交易所指数（巴西）

MERVAL: Buenos Aires Stock Exchange Merval Index (Argentina)
MERVAL：布宜诺斯艾利斯证券交易所Merval指数（阿根廷

NIKKEI: Nikkei 225 Index (Japan)

HANG SENG: Hang Seng Composite Index (Hong Kong)

FTSE 100: Financial Times Stock Exchange 100 Index (UK)

EURO STOXX: EURO STOXX 50 (Europe)
EURO STOXX：EURO STOXX 50（欧洲）

### Indices are Virtual Portfolios

Indices are not actual funds that people invest in.

They represent the aggregated performance of a collection of stocks.

### Indices Describe the Market

• Indices track subgroups of the market, and may be designed specifically to track stocks in the same stock exchange, same country, or same sector.
• Indices give investors a measure of the market’s status.
• Professional investment managers may use indices as benchmarks against which they can evaluate their own fund’s performance.

CSI 300 就是我国股指期货的标的物沪深300指数。2005年4月8日,中证指数有限公司沪深300指数(CSI 300 Index)正式登陆交易所行情系统运行。

## Market Cap(市值)

Market Cap: Market capitalization/capitalisation 市场总值，上市公司的股票市值总合。它的大小和成长度是判断一个公司好坏的重要依据。指公司总的市场价值，公式为，公司总股本 × 每股股价。

Market capitalization defined as large-cap,mid-cap or small-cap.In other words,market cap is the market value of the company.

## Growth V. Value(成长股和价值股）

Whether companies are considered growth or value stocks, So, what's a growth stock, and what's a value stock?

Growth Stock: Growth in sales, revenue, earnings

Value Stock: Stable sales, revenue, earning.

## Ratios(比率)

### Ratios (Fundamentals)

Price to earnings ratio: the stock price divided by the company’s earnings per share over the past four quarters.

Price to sales ratio: the the stock price divided by the sales per share over the past four quarters.

Price to book ratio: the stock price divided by the book value per share.

The book value is the company’s accounting value, which is assets minus liabilities.

Growth stocks tend to have high price to earnings, price to sales, and price to book ratios.

Value stocks tend to have lower price to earnings, price to sales, and price to book ratios.

Generally speaking, software and biotechnology stocks have high PE ratios, while agriculture and construction companies tend to have lower PE ratios.

## Index Categories(指数分类)

### S&P Index Categories

Indices are created as subsets of other indices. One way of creating subsets include categorizing by market cap, and then value vs. growth. This is how Standard and Poor’s breaks down some of its indices:

## Price Weighting(价格加权)

Price Weighting: Add up all the prices, and you’ll have an index value.

Note in practice that we’ll rescale this number. You’ll see this later in the lesson.

## Market Cap Weighting(市值加权)

We can get an index by adding up the market cap of all stocks in the index. Note that in practice, we’ll rescale this number. You’ll see this later in the lesson. $\sum_{1}^{n} (price_i \times number of shares_i)$

### 练习题

A market cap weighted index has two stocks, A and B. Stock A has 3 million shares at $5 per share. Stock B has 10 million shares at$2 per share. What are the weights of stock A and B in the portfolio?

The market cap of stock A is 3 million shares times $5, or$15 million.
The market cap of stock B is 10 million shares times $2, or$20 million.
The total market cap is $15m +$20m = $35m. Stock A has a weight of$15/$35 = 43%. Stock B has a weight of$20/\$35 = 57%.