Stock Terms: What Is Stock Index?

Key words: stock terms, stock index, stock index,

Share index

The stock index is the stock price index.

It is a kind of reference figure compiled by stock exchanges or financial services institutions to indicate the fluctuation of stock market.

As stock prices fluctuate, investors are bound to face market price risks.

It is easy for investors to understand the price change of a specific stock, and it is neither easy nor too annoying to understand the price changes of a variety of stocks.

In order to adapt to this situation and need, some financial services organizations use their business knowledge and familiarity with the market's advantages to compile stock price indices and publish them publicly as indicators of market price changes.

Investors can test the effect of their investment and predict the trend of the stock market.

At the same time, journalists, bosses and even leaders of political circles are also used as reference indicators to observe and predict the social and political development situation.

This stock index is the average price of the stock market.

The compilation of stock index is usually based on a month in a certain year. The stock price of this base period is taken as 100. The percentage of the stock price and the base period price is calculated by comparing the stock price and the stock price index in that period.

According to the rise and fall of index, investors can judge the trend of stock price change.

And in order to reflect the stock market's trend in real time, all stock markets almost immediately announce the stock price index when the share price changes.

To calculate stock index, three factors should be considered: one is sampling, that is, to extract a small number of typical constituent stocks in many stocks; the two is weighted, weighted or unweighted by unit price or gross value; three, calculating procedures, calculating arithmetic mean, geometric mean, or taking into account the price and total value.

Because of the large number of listed stocks, the calculation of the average price or index of all listed stocks is difficult and complex. Therefore, people often choose several representative sample stocks from the listed stocks and calculate the average price or index of these sample stocks.

It is used to represent the general trend and the fluctuation of stock price in the whole market.

The following four points are often considered when calculating the stock price index or index:

(1) the sample stock must be typical and common. For this reason, the selection of samples should take into consideration the factors such as the distribution of the industry, the influence of the market, the grade of the stock, the proper quantity, etc.

(2) the calculation method should be highly adaptable, which can make corresponding adjustments or amendments to the changing stock market, so that the stock index or average will have better sensitivity.

(3) we must have scientific calculation basis and means.

The caliber of the calculation basis must be unified, generally based on the closing price, but with the increase of the calculation frequency, some prices are calculated at the hourly price or even shorter time.

(4) the base period should have better balance and representativeness.