Basic information on financial databases: cook books, tips and tricks & economic news

This blog contains schematic easy to grasp - hands on - help in performing searches in economic databases, making work sets and making them inter-exchangeable between the databases.

* Disclaimer. I am not a finance professional. Most posts are the result of personal findings.

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Why rebasing?

Rebasing is a quite important ‘technique’ to analyze and display stock price histories. To understand the importance of rebasing, let’s have a look at the chart below which shows the price (Pi, price index in U$) history of Aex compared to Nasdaq Comp.
These two companies’ prices are moving at a totally different price range (see table).
A rebase chart shows not an absolute price change but it displays at each point of time how much percentage the price changed from a selected date in the past. (called rebase date). In this way we can compare the performance of companies at a different price level. Actually rebasing is a very simple index calculation:

Rebased Price at time t RPt
P = price at day t
P0 = price at rebase date
In formula:
RPt = P / P0 x 100

In Datastream I used the Expression picker and searched for "rebase" resulting the following formula:
REB#(X,Time) (rebase last value = 100); Datastream code (which appears in the menu) 025E
X = in this case the index, Time is latest quote)

Resulting chart:

In figures, rebased and not rebased:

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