What Is Equity Market Performance?

The stock market index, or stock price index, is a reference number prepared by a stock exchange or financial service institution to indicate changes in the stock market.

Stock market index

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To calculate the stock index, three factors must be considered: first, sampling, that is, taking a few representative constituents out of many stocks; second, weighting, weighted average by unit price or total value, or unweighted average; Calculate arithmetic mean, geometric mean, or both price and total value. Because there are many types of listed stocks, the calculation of the average price or index of all listed stocks is arduous and complicated. Therefore, people often select several representative sample stocks from listed stocks and calculate the average price of these sample stocks. Or index. It is used to indicate the overall trend of stock prices and the rate of change in the entire market. The following four points are often taken into account when calculating the average stock price or index: (1) The sample stock must be typical and ordinary. To this end, the sample should be considered in consideration of its industry distribution, market influence, stock grade, and appropriate number. (2) The calculation method should be highly adaptable, which can make corresponding adjustments or amendments to the constantly changing stock market conditions, so that the stock index or average has better sensitivity. (3) There must be scientific calculation basis and means. The caliber of the calculation basis must be uniform. Generally, the closing price is used as the calculation basis, but as the calculation frequency increases, some are calculated at the hourly price or even a shorter time. (4) The base period should be well balanced and representative.