Max(Reward) Control
At the end of the day, we are interested in measuring the probability of gaining max(Reward) from an investment. In doing so, we calculate Return on Investment (ROI) as follows [1,3]: ROI=[(Net Return)/Cost]*100%= (Capital Gains)-Commission+(Dividend Yield) and Annualized ROI = [(1+ROI)**(1/n)-1]*100%, where n is the number of investment years. It is clear that the negative values ROI<0 mean that total costs are greater than returns (red score), whereas positive values ROI>0 indicate that net returns are positive because total returns are greater than any associated costs (green/amber). Even though ROI is a direct measure of profitability, it does not adjust for risk. Both ROI and Return On Equity (ROE) are popular measures of financial performance and profitability [1]. While ROI is total profit divided by your initial investment , ROE, on the other hand, measures how much profit a company generates when compared to its shareholders' equity. Becau...