Price To Book

The Price To Book Fundamental Analysis lookup allows you to check this and other indicators for any equity instrument. You can also select from a set of available indicators by clicking on the link to the right. Please note, this module does not cover all equities due to inconsistencies in global equity categorizations. Please continue to Equity Screeners to view more equity screening tools.
  
Price to Book ratio is mostly used in financial services industries where assets and liabilities are typically represented by dollars. Although low Price to Book ratio generally implies that the firm is undervalued, it is often a good indicator that the company may be in financial or managerial distress and should be investigated more carefully.

P/B

 = 

MV Per Share

BV Per Share

Price to Book (P/B) ratio is used to relate a company book value to its current market price. A high P/B ratio indicates that investors expect executives to generate more returns on their investments from a given set of assets. Book value is the accounting value of assets minus liabilities.

Price To Book In A Nutshell

As with many ratios that pertain to the fundamental aspect of a company, the lower the ratio is could be there is value to be had. However, you need to be aware because a lower price to book ratio could also be an indication there is a fundamental issue at hand that needs to be addressed.

Price to Book is a widely used ratio and is used to compare market value to book value, giving you a ratio that can be compared against others in the industry. Learning the different ratios that look at the fundamental health of a company is key, because they are used in various reports.

Closer Look at Price To Book

The first part of the equation is market price and this can be looked at in just about any manner. Market price could just be simply left at that while you figure this equation, but if you know the market price is down you can figure out why and that can help you in understand this ratio better. The second value of the equation is book value and that is straight forward. It is important to know how an equation works because if something seems off, you need to be able to pick it apart and find out why.

With that, be sure to begin implementing this new study into your current setup slowly and see if it brings you value. Search the Internet and see how other people are using this and find ways to have it bring more value. Also, join an investing or trading community, as this is one of the best ways to get real time feedback and converse with people who are actively participating in the market. Lastly, if you have hired an investing professional, consult with them and they would be more than happy to walk with you through an explanation and example. Price to book is a wonderful data point to help guide you in the right direction and it should certainly be added the toolbox of your investing knowledge.

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Pair Trading with Investor Education

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Investor Education position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Investor Education will appreciate offsetting losses from the drop in the long position's value.
The ability to find closely correlated positions to AES could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace AES when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back AES - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling The AES to buy it.
The correlation of AES is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as AES moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if AES moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for AES can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Check out Investing Opportunities to better understand how to build diversified portfolios. Also, note that the market value of any private could be closely tied with the direction of predictive economic indicators such as signals in manufacturing.
You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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