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Help with % changes

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  • 09-07-2012 7:39pm
    #1
    qwabercd
    Registered Users Posts: 2,200 ✭✭✭


    Hi,

    I am calculating the % change in a shre price over 3 days. However I want to adjust it for the % change in the FTSE 100 over the same period. How do I go about doing this, can't seem to get my head around it! Thanks in advance for any help.


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    #2
    Yakuza
    Registered Users Posts: 5,141 ✭✭✭Yakuza


    If you divide the share you're interested in's change by that of the FTSE, you'll have the ratio you're looking for, if I've understood your question.

    A: share price 3 days ago
    B: share price now
    C: FTSE 3 days ago
    D: FTSE now

    (B/A) / (D/C) should give you what you want.

    Expressing both as percentages and then dividing isn't necessary as the 100 divisors to calc the percentage will cancel out (and may even lead to slight rounding errors if you do the calc with interim steps).


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    #3
    qwabercd
    Registered Users Posts: 2,200 ✭✭✭qwabercd


    Yakuza wrote: »
    If you divide the share you're interested in's change by that of the FTSE, you'll have the ratio you're looking for, if I've understood your question.

    A: share price 3 days ago
    B: share price now
    C: FTSE 3 days ago
    D: FTSE now

    (B/A) / (D/C) should give you what you want.

    Expressing both as percentages and then dividing isn't necessary as the 100 divisors to calc the percentage will cancel out (and may even lead to slight rounding errors if you do the calc with interim steps).

    Thanks. Just to double check.
    e.g Share price drops from 10 to 8
    and FTSE rises from 14 to 15

    8/10 divided by 15/14 = 0.7466

    Does that mean the adjusted share price has fallen by 25.34%?


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    #4
    Yakuza
    Registered Users Posts: 5,141 ✭✭✭Yakuza


    qwabercd wrote: »
    Thanks. Just to double check.
    e.g Share price drops from 10 to 8
    and FTSE rises from 14 to 15

    8/10 divided by 15/14 = 0.7466

    Does that mean the adjusted share price has fallen by 25.34%?

    The maths is fine, but I wouldn't use the terminology "adjusted share price" - that's more used when a company has a rights issue and issues more shares etc. and the new share price is calculated by dividing the new total shares issued and the new value of the company - nothing to do with market performance.

    It would be better to say that something along the lines of "that share has underperformed the FTSE by 25.34%".

    Intuitively, if the share had tracked the FTSE, its share price should be 15/14 * 10 or 10.7142857, but instead it is only 8, which is 0.7466 of this price, or down 25.34%


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