dear all,
I have to compare the synchronicity, beta and alphas of the select stocks with their peer group.
How to identify the competitor stocks in the market.
I am thinking of using the following variables to identify the competitor stocks in the same industy by using any of the following variables.
1. market capitalisation
2. PE ratio
3. PBV
please let me know whether it is a right approach and if so, which variable should be selected out of the three. or is there any other better alternative approach.
thanks in advance.
I think the following paper will help you out:
The real value of China's stock market
JN Carpenter, F Lu, RF Whitelaw - 2015 - nber.org
I would have thought if you wish to find out who the industry competitors are, that is not determined by ratios but by a qualitative assessment of the companies in that particular sector. I.e. the companies who provide similar products or services. You would find that out through stock market listings and the press. Only after you have determined who the competitors are, can you then use ratio analysis to compare them.
The three parameters that you mention can provide information but I think PBV can provide better information for comparing stocks. Book value is important criteria for comparison. So PBV would be better.
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