1.1.5.1 Stock Index

A stock index is a data obtained by collecting a series of stock data according to a certain classification standard and calculating the series of stocks according to a certain calculation method.

The above expressions of the concept of index involve two aspects: classification standard and calculation method.

The classification criteria can be used in the current habits and can be divided into two types: broad and narrow:

• A broad classification generally refers to the collection of stocks of all transactions on a stock exchange. This can be used to reflect the status of the entire trading market, thereby reflecting the overall economic performance of the country or region.
• In the narrow sense, the stocks are collected according to certain daily standards (such as finance, energy, agriculture, etc.), which can be used to reflect the status of an industry, which can reflect the economic operation of an industry.

There are usually two ways to calculate:

• Arithmetic Mean: Averages the sample data by arithmetic averaging.
• Weighted average: averages based on the weight of the sample data.

[Thinking] When an investor observes an index, is it conscious to understand the scope and calculation method of its sample data? Do you understand the impact of this information on the choice of investment products?

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