How to understand the figures of my portfolio to obtain better results? (II)

We have already written about some relevant figures to manage your portfolio, as the performance evolution, the weight of the assets and the relationship between performance and volatility. There are three other parameters to take into account for your portfolio. They are related to the diversification of the portfolio assets.

It is always said that diversification limits risks and helps avoid high losses. It depends on how it is considered. For instance, you can have several assets, but it does not mean that the whole portfolio is diversified. On the contrary, it can have a low diversification, if the assets are very correlated. In this case, a movement in one of your securities has effects in the others.

Another relevant item to obtain from your portfolio is the risk contribution. These figures explain the proportion of each security to the whole risk of your portfolio. This analysis helps take decisions, as selling a share or a fund if the risk is high related to the performance that it provides to the whole investment.

Risk contribution in a T-Advisor portfolio

In the chart above, it is possible to see the different risk contribution of each share to a specific portfolio focused in Germany. If we compare this chart with the weight of each asset, IWKA is the largest, following by Dialog Semicon. However, both have provided the highest unrealised gains (59% and 46%, respectively). On the contrary, BB Biotech AG has unrealised losses of 78.5%, but the weight is 1.83% of the portfolio. That is why its risk contribution is so low.

Finally, the last measure about diversification is diversification benefit. We have already commented about it, but it is interesting to connect this figure with others to analyse the portfolio. Diversification benefit quantifies how much you earn or how much you avoid losing if you diversify your investments.

Diversification benefit in T-Advisor

As the table shows, a diversified investment protects against higher risks, if the investment cycle is negative for you. In this case, the investor is avoiding losing a 24% more.

In T-Advisor, you can also check your diversification in the “follow up” tab of your portfolio report.

diversification follow up in T-Advisor

As you can see in both articles, it is necessary to analyse your investments from different points of view and connecting different figures to understand the quality of your portfolio. If you do not understand some of these figures, you will have to deal with troubles for your money.

Weekly market opportunities in T-Advisor: the best on March, 20th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Abertis Infraestructuras (Madrid). The world’s largest managing company of toll roads and telecommunication infrastructures.

Abertis main figures in T-Advisor

Abertis chart in T-Advisor

AMERICAS

  • Valero Energy (S&P 500). An international manufacturer and a marketer of transportation fuels, other petrochemical products, and power.

Valero Energy main figures in T-Advisor

Valero energy chart in T-Advisor

ASIA-PACIFIC

  • China Everbright Limited (Hong Kong). A Hong Kong based financial services company in asset management, investment and merchant bank in the Greater China region, including Mainland China and Hong Kong. It is a subsidiary of China Everbright Group, a Chinese state-owned enterprise.

China Everbright main figures in T-Advisor

China Everbright chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Weekly market opportunities in T-Advisor: the best on March, 13th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Reckitt Benckiser Group (London). A British multinational consumer goods company that manufactures health, hygiene and home products.

Reckitt Benckiser Group main figures in T-Advisor

Reckitt Benckiser Group chart in T-Advisor

AMERICAS

  • Femsa (Mexico). The largest independent Coca-Cola bottling group in the world and the largest convenience store chain in Mexico.

Femsa main figures in T-Advisor

Femsa chart in T-Advisor

ASIA-PACIFIC

  • Insurance Australia Group (Australia). A holding of several insurance brands in Australia, New Zealand and Asia.

Insurance Australia Group main figures in T-Advisor

Insurance Australia Group chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Weekly market opportunities in T-Advisor: the best on March, 6th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Allianz (Xetra). One of the world ‘s largest insurance and financial services company.

Allianz main figures in T-Advisor

Allianz chart in T-Advisor

AMERICAS

  • BB Seguridade (Sao Paulo). The insurance subsidiary of Banco do Brasil created in 2012.

BB Seguridade main figures in T-Advisor

BB Seguridade chart in T-Advisor

ASIA-PACIFIC

  • Tata Consultancy (Bombay). A subsidiary of the Indian Tata Group focused on information technology, consultancy and business solutions.

Tata Consultancy main figures in T-Advisor

Tata Consultancy chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Ranking T-Advisor: The best stocks and funds in February

What stocks and funds were the best in February? T-Advisor publishes its ranking taking into account the score. T-Advisor patented score provides an asset rating (bullish, neutral or bearish) based on key performance indicators and technical analysis.

The best shares in February were as it follows:

Company Score Perf. YTD Volatility Weekly VaR Market

EUROPE

Verbio

10

82.02%

43.49%

-11.12%

Deutsche Boerse
Fasasoft

10

43.98%

26.11%

-5.38%

Deutsche Boerse
Sinnerschrader

10

38.77%

31.91%

-6.60%

Deutsche Boerse
Ipsen

10

26.20%

23.17%

-5.71%

Paris
Melexis

10

26.14%

25.84%

-5.73%

Brussels

USA-CANADA

The Medicines

10

54.45%

45.92%

-7.80%

Nasdaq
Cynosure

10

44.74%

37.66%

-6.08%

Nasdaq
Netease.com

10

41.66%

31.42%

-6.11%

Nasdaq
Marketaxess

10

32.88%

27.66%

-4.92%

Nasdaq
Incyte

10

32.74%

38.80%

-9.70%

Nasdaq

ASIA-PACIFIC

Geely Auto

10

42.51%

34.76%

-7.66%

Hong Kong
Minebea

10

31.84%

49.41%

-8.31%

Tokyo
Tosoh

10

18.74%

36.23%

-6.53%

Tokyo
CSL

10

17.38%

22.98%

-5.04%

Australia
Yasukawa Denki

10

15.84%

27.86%

-6.02%

Tokyo

LATAM

Forus

9.06

7.75%

28.89%

-7.02%

Santiago de Chile
Embonor

8.80

4.74%

23.23%

-4.97%

Santiago de Chile
Parque Arauco

8.77

6.92%

17.02%

-2.92%

Santiago de Chile
Paz Corp.

8.26

12.50%

31.27%

-6.90%

Santiago de Chile
Alicorp

8.24

5.34%

24.41%

-4.01%

Lima

The best funds in February were as it follows:

Fund Score Perf. YTD Volatility Weekly VaR Managing company

EQUITY

INVESCO FUNDS SERIES – ASIAN EQUITY FUND/A/EUR

9.72

12.47%

14.22%

-2.57%

Invesco
FF – NORDIC FUND/D/SEK

9.69

7.46%

15.79%

-2.16%

Fidelity
FRNKLN IND BLUE – UNITS – GROWTH/-/INR

9.68

8.96%

11.96%

-2.18%

Franklin Templeton
INVESCO FUNDS SICAV – NIPPON SMALL/MID CAP EQUITY F…

9.67

4.77%

23.34%

-7.33%

Invesco
ALLIANZ INST. INV. SERIES – EUROPEAN MICRO CAP/A/EUR

9.65

9.15%

13.49%

-1.82%

Allianz
DSP BR 100 EQ – UNITS – REGULAR GROWTH/-/INR

9.64

9.67%

13.90%

-3.10%

BlackRock
FTIF – TEMPLETON EMERGING MARKETS SMALLER COMPANIES…

9.62

9.34%

11.16%

-2.29%

Franklin Templeton
FTIF – FRANKLIN TECHNOLOGY FUND/A/USD

9.61

9.95%

13.05%

-2.70%

Franklin Templeton
BANKINTER EEUU NASDAQ 100, F.I.

9.56

9.17%

12.23%

-2.96%

Bankinter

FIXED INCOME

AVIVA INVESTORS – GLOBAL HIGH YIELD BOND FUND/A/EUR

9.55

2.68%

10.42%

-1.32%

Aviva
AVIVA INVESTORS – EMERGING MARKETS BOND FUND/A/EUR

8.93

3.58%

8.60%

-1.89%

Aviva
ABERDEEN GLOBAL II – AUSTRALIAN DOLLAR BOND FUND/A/AUD

8.86

0.71%

4.24%

-1.10%

Aberdeen
AVIVA INVESTORS – GLOBAL CONVERTIBLES FUND/A/EUR

8.68

3.31%

13.20%

-1.85%

Aviva
BKRK MNYD PA QT – SHS OF BENEF INTEREST/-/USD

8.55

1.71%

7.87%

-1.74%

BlackRock
FTIF – TEMPLETON GLOBAL TOTAL RETURN FUND/A/PLN

8.40

1.92%

10.87%

-2.62%

Franklin Templeton
ALLIANZ GIF – US HIGH YIELD/A/PLN

8.38

2.20%

10.12%

-0.96%

Allianz

Weekly market opportunities in T-Advisor: the best on February, 27th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Arseus (Brussels). A supplier of products and services to professionals and institutions in the healthcare sector in Europe, the United States, Brazil and Argentina.

Arseus main figures in T-Advisor

Arseus chart in T-Advisor

AMERICAS

  • Paypal (Nasdaq). One of the world’s largest Internet payment companies.

Paypal main figures in T-Advisor

Paypal chart in T-Advisor

ASIA-PACIFIC

  • Shinsei Bank (Tokyo). A leading diversified Japanese financial institution that provides a full range of financial products and services to both institutional and individual customers.

Shinsei Bank main figures in T-Advisor

Shinsei Bank chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

France: Looking at the presidential election

This year is not going to be easy for Europe. Apart from the next negotiation between the European Union and Great Britain for the Brexit, the continent will celebrate three main elections: Germany, Netherlands and France. These three countries are founders of the EU in the 50’s and there is a reaction against Europe in all of them.

The current president, the socialist François Hollande, announced last year his intention to not to repeat as a candidate for a new term. His presidency dealt with several difficulties both in economics and in politics, specially related to the terrorist attacks (in Paris and Nice). The polls were very negative, as he was rejected for a huge number of voters. Hollande retreat has opened new chances for other candidates. The best positioned was the right-wing candidate François Fillon, but the corruption scandals linked to his family have reduced his chances. In this case, the second best positioned candidate is the far right politician Marine Le Pen.

Marine Le Pen promises to abandon de EU (also known as Frexit) if she win the election in next April-May. Her popularity and the scandals around Fillon have worried the markets. What if she wins? What effects would it have? If we look at the chart of the evolution of the French benchmark index CAC40, the trend was bearish when the Fillon scandal popped up. It is also interesting the parallelism amongst the British, the German and the French markets.

Comparison between Germany, France and Britain in index evolution

How can we understand this chart? Well, this correlation also means that all three economies have deep boundaries. It is not so easy to change such narrow financial and economic links just with a referendum or a decision of abandon the EU.

In any case, the French stock exchange benefits from the general bullish trend, as we can also perceive in this chart:

Global trend evolution in France

If we consider the CAC40 best performers, there are several industrial and banking companies, as the T-Advisor list shows:

Best performers in CAC40 in France

So, France is still a powerful economy with several competitive banks and industries and the markets have strong trend boundaries with Germany and Britain. It is possible a surprise, but it is difficult to think that this structure will change even in the middle term. In any case, a victory of Marine Le Pen would have very relevant consequences for the evolution of the European united economy.

Weekly market opportunities in T-Advisor: the best on February, 20th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Tomra (Oslo). The largest reverse vending machine (RVM) producer globally and leading sensor-based machines for sorting and recycling.

Tomra main figures in T-Advisor

Tomra chart in T-Advisor

AMERICAS

  • Aon Corp. (NYSE). A company with business in risk management, insurance and reinsurance brokerage, investment banking, human resource solutions and outsourcing services.

Aon Corp main figures in T-Advisor

Aon Corp. chart in T-Advisor

ASIA-PACIFIC

  • Wesfarmer (Australia). An Australian conglomerate with interests in retail, chemicals, fertilisers, coal mining and industrial and safety products.

Wesfarmer main figures in T-Advisor

Wesfarmer chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.

Comparing my assets with its benchmark: some figures for analysis

Comparative figures asset benchmark

As investors, we look for the best performance. A good performance is not only an absolute figure, but also a relative one, when we make comparisons. For instance, if a share in our portfolio has a performance of 10% in a year, we can think that it is a nice number, in absolute terms. But if the reference index of the share has performed a 15%… well, it is not so nice. That is why it is interesting to take into account some figures to understand if our securities have a good quality compared with their benchmarks:

  • Relative trend of the security versus index: it compares both behaviours. If the figure is positive, the security is strong versus the index. If it is negative, there is a weakness. It is one sign to detect if our stock or fund is performing properly against the index.
  • Tracking error: this indicator measures the deviation of the difference in daily returns of the security and the benchmark. A higher figures shows that the daily returns of the security has a larger difference compared with the daily returns of the index.
  • R 2: it measures the similarity of the daily behaviour of both the asset and the index. If the figure is near to 1, there is a strong parallelism. If it is near 0, there is no relation.
  • Correlation: if R 2 measures the similarity of the behaviour, this provides more specific information. If the figure is near to 1, there is a positive correlation (both move identically in the same trend). If it is near to -1, the correlation is negative (both move identically in opposite trends). If it is near to 0, there is no correlation.

R 2 and correlation are very important to find assets not linked with the benchmark if its evolution is negative, for instance, when the index drops. On the other hand, it is also interesting to find correlated assets when the index soars.

  • Alpha and beta: both are quite important to measure the outperformance and volatility of the asset compared with the benchmark. We have an extended explanation in this post. Typical investor behaviour is looking for assets with good alpha.

Of course, the analysis of a single reference is not enough to get an idea about the relationship between the asset and the index. We have to look at all data and connect them to understand in a right way if we should put our money there or just go our quickly.

Weekly market opportunities in T-Advisor: the best on February, 13th

T-Advisor updates weekly a list of market opportunities from several stock exchanges around the world. We sum up a selection of the best ones:

EUROPE

  • Inmobiliaria Colonial (Madrid). One of the main Spanish real estate corporations.

Inmobiliaria Colonial main figures in T-Advisor

Inmobiliaria Colonial chart in T-Advisor

AMERICAS

  • Finisar (Nasdaq). A manufacturer of optical communication components and subsystems.

Finisar main figures in T-Advisor

Finisar chart in T-Advisor

ASIA-PACIFIC

  • Zhejiang Expressway (Hong Kong). An infrastructure company engaged in investing, developing and operating expressways in Zhejiang Province, China.

Zhejiang Expressway main figures in T-Advisor

Zhejiang Expressway chart in T-Advisor

Find more opportunities from the main exchanges in the world on our module “Market opportunities” in T-Advisor.