COMBINING INDICATORS
Created by
- Jose_Henrique
Created at
Motivation
Do you wanna buy a share with high growth or low valuation or high growth and low valuation?
Description
Eventually, we desire to compound an investment portfolio based on two or more quantitative indicators.
In this case, we can combine these indicators (or maybe their ranks) to create a new one and rank the best choices.
This combination can be linear (simple mean) or geometric (geo mean).
When it's a linear, both indicators can result a higher value easier. But on gometic formula, both must have a high value to produce another high value.
Formulas
Linear combination = (X + Y) * (1/2)
Geometric combination = (X + Y)^(1/2)
