# ¶ Financial Metrics

1. ## ¶ Earnings Per Share (EPS)

It is a company's quarterly or annual net income applicable to common stock holders divided by the total number of shares outstanding in the balance sheet.

1. ## ¶ Book Value Per Share (BVPS)

It is a company's total stockholders' equity divided by the total number of shares outstanding in the balance sheet.

1. ## ¶ Dividends Per Share (DPS)

It is a company's quarterly or annual dividends paid divided by the total number of shares outstanding in the balance sheet.

1. ## ¶ Sales Per Share (SPS)

It is a company's quarterly or annual total revenue divided by the total number of shares outstanding in the balance sheet.

1. ## ¶ Market Capitalisation

Market capitalisation refers to the total market value of a company's outstanding shares of stock in currency terms. Commonly referred to as "market cap," it is calculated by multiplying the total number of shares outstanding by the market price of one share.

# ¶ Data Science Methods

1. ## ¶ Regression Analysis

Regression analysis seeks to find the relationship between one or more independent variables and a dependent variable.

1. ## ¶ Robust Regression

Robust regression is a form of regression analysis designed to overcome some limitations of traditional parametric and non-parametric methods. Certain widely used methods of regression, such as ordinary least squares, have favourable properties if their underlying assumptions are true, but can give misleading results if those assumptions are not true. Thus ordinary least squares is said to be not robust to violations of its assumptions.

Robust regression methods are designed to be not overly affected by violations of assumptions by the underlying data-generating process. In particular, statistical estimates generated by a robust regression are less sensitive to outliers in the underlying data than estimates obtained via a least squares regression.

# ¶ Portfolio Management Concepts

1. ## ¶ Risk Premia

The return that can be earned by holding an exposure to a risk factor is known as risk premia. For example, the equity risk premium is the return earned by holdings stocks rather than safe assets such as cash or government bonds. In other words, the equity risk premium is the compensation you receive for assuming equity risk. External source for evidence on Equity Risk Premia.

Similarly, the return derived through exposure to a risk factor is its factor risk premia. When inexpensive stocks deliver stronger return than expensively priced stocks, the term used is that the Value risk premia is positive because high Value stocks have performed better than low Value stocks.

1. ## ¶ Risk Factor

In the context of finance and investment theory, a risk factor is a common (systematic) driver of securities’ returns. In other words, a risk factor or commonly referred to as factor, is a common characteristic amongst all stocks and explains some proportion of each stock's return. The proportion of a stock's return that cannot be explained by any risk factor is referred to as the stock-specific (non-systematic).

The magnitude of the exposure to a risk factor and the risk premium delivered by the risk factor determines its contribution to the return of the asset, be it a stock or a portfolio. Read more

1. ## ¶ Exposure

Exposure is the sensitivity of a stock or portfolio to a risk factor. A widely known risk factor is the equity market itself and the risk factor that measures the sensitivity to the market is Beta. Beta exposure measures the sensitivity of an asset's movements to the equity market. Higher the exposure of an asset to a risk factor, the greater the influence that the risk factor will have on the asset's risk and return. Read more

1. ## ¶ Information Ratio

Information Ratio or (IR) is defined as the return per unit of risk and is calculated by dividing return over risk.

1. ## ¶ Direct Indexing

Direct indexing is an approach to index investing that involves buying the individual stocks that make up an index, in the same weights as the index. This is in contrast to buying an index mutual fund or index exchange-traded fund (index ETF) that tracks the index. Read more

External source for evidence on Direct Indexing.