Analysis Of Listed Company's Financial Condition And Stock Returns Relevance

In the long run, the listing Corporation’s financial condition and stock returns is theexistence of a link, high growth companies will be favored by investors, and ultimatelyreflected in stock returns, which is the basis of the theory of investment value. But there area lot of financial indicators of the company, investors will always pay attention to thedifferent factor, so if you look at a relatively short period of time, there may be thestrongest factor dynamic change. If you can capture the strongest factor combination thenthrough stock at each point in time, and then choose to obtain positive excess return ofstocks portfolio from the strongest factor, finally the cumulative excess return should beable to more than Alpha factor of pure effect. If the guess is confirmed, it means thatthe financial factor can distinguish the stock market to a certain extent. This paper mainlyused the factor contribution degree and factor deviation mainly comes from quantitativetrading theory.In recent years, quantitative trading has gradually become the mainstream of theinvestment market, the market in Europe and America, quantitative trading accounted formore than90%of all trading, while in China this ratio is less than10%. But undeniableis, quantitative trading investment has become the mainstream trend is unstoppable, ithas no subjective trading advantage, can overcome the weakness of human nature in thetransaction process; avoid the influence of emotion on transactions.Variety selection increasingly difficult capital market in the continuous innovation, securities, we hope the rules and meaning behind market data complex, want to choose methods by quantitative means, the combination of fusion research fundamental judgment, as the subject of investment value of the securities is empirical analysis, through long-term research tracking and sustained, mining operation rules of the capital market, build the real quantity of stock picking strategy for China capital market, internal relations so as to better explain the financial condition and stock returns.