RISK AWARE INVESTMENT GUIDE FOR EVERYONE

      It is all about Min(Risk)/Max(Return) Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return , as illustrated in Figure 6. Generally, the  R isk /R eturn trade-off  is calculated with the the aforementioned key drivers of returns in combination with Risk FMR   such as STDEV, Alpha/Beta, the Treynor/Sharpe ratio,   VaR/CVaR, R-squared, DCR,   DER, ICR, and DCL. Let’s say we have to select either TSLA or AAPL based upon current EPS and STDEV values (Q4 2021): Table 14 : Example EPS and STDEV for TSLA and AAPL. Stock EPS $ Q3 2021 STDEV Q4 2021 TSLA 1.86 3.56 AAPL 1.3 1.54   Even though EPS(TSLA)>EPS(AAPL), your investment in TSLA would be considered   much more risky than that in AAPL because STDEV(TSLA)/STDEV(AAPL)~2.3.   For instance, in the...

  Let’s dive in liquidity of stocks [1,52-54] and related BI indicators such as the Average Daily Traded Volume (ADTV) and Share Turnover (SHT),   Depth of Market (DOM), Bid-Ask Spread (BAS) and optional Variance Ratio (VR).    Liquidity refers to the efficiency or ease with which an asset can be converted into ready cash without affecting its market price. The easier it is to buy and sell an asset, the more liquid it is. Liquidity applies to any financial market, from stocks to precious metals, but some are more liquid than others.   The most liquid asset of all is cash itself. Tangible assets, such as real estate, fine art, and collectibles, are all relatively illiquid. Most securities, such as stocks, ETFs, mutual funds, bonds and commodities are liquid assets. The most liquid market in the world is forex [53].   Generally, stocks of companies with the largest MC are quite liquid (Green). If a stock cannot be sold easily without a considerable loss, it i...