Investing For Beginners

Investing For Beginners is a series of articles, resources, and other information about basic investments, value investing, quantitative research and other ideas.

Quant Guide to Stock Price Calculation

 

Adjusted stock prices are the foundation for time-series analysis of equity markets. The best analysts understand the adjustment process from first principles.


Guide to Stock Price Calculation

Excellent quants know their craft from first principles. This is especially true for things as basic as adjusting stock prices for historical analysis. Excellent quants know their craft from first principles. This is especially true for things as basic as adjusting stock prices for historical analysis. Historical stock price adjustments are usually multiplicative. This ensures that the returns from holding a stock on non-adjusted days are unchanged by any stock price adjustment. This also ensures that historically-adjusted stock prices are never negative. Some providers do, however, use additive adjustments, resulting in negative stock prices. More ...

by Steve Auger