PRAAMS InvestWatch: white paper
  • InvestWatch -- intro
  • PRAAMS Ratio
  • Return factors
    • Valuation
    • Performance
    • Analyst view (stocks)
    • Market view (bonds)
    • Profitability
    • Growth
    • Dividends (stocks) and Coupons (bonds)
  • Risk factors
    • Default risk
    • Volatility (market risk under normal conditions)
    • Stress-test (market risk under stress conditions)
    • Selling difficulty / Liquidity
    • Country risks
    • Other risks
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  1. Return factors

Performance

This metric reflects the performance of the asset’s price relative to its relevant peers on different time scales (one week, one month, three months, and six months). Depending on the initial relative valuation standing, price changes can make the asset more or less ‘undervalued’ or ‘overvalued’. The lowest score (1 of 7) is assigned when an undervalued asset’s price falls while that of the peers increases, i.e., an undervalued asset becomes even more undervalued. The same low score is assigned when an overvalued asset rapidly becomes even more overvalued relative to its peers, which is typical for early-stage single-stock bubbles. On the contrary, the highest score (7 of 7) is when an undervalued asset increases in price faster than its peers, thus correcting its relative undervaluation and making its valuation ‘fair’.

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Last updated 12 months ago