Since there is no standard definition of the benchmark, it is just an assumption to understand a "What if..?" scenario. We strongly advise you to not take reference of the values in your own strategy.
This study has surviorship bias as you knew these stocks survived but there were many in Nifty 50 historically since 2014 which are no longer part of the index.
You are absolutely correct with this statement. This is a hypothetical study on a "What if...?" scenario which was backtested on limited data. The purpose was to understand how ROE/ROCE works in stock selection.
U have compared 5 year ROCE of today whereas u should take 5 year ROXE of 2009 to 2014 as u would have started SIP in 2014 hence u don't have future data ofcourse those who have greater roce will have performed great in the past
This is a hypothetical study on a "What if...?" scenario which was backtested on limited data. The purpose was to understand how ROE/ROCE works in stock selection.
But nonetheless, this is a good observation and we will keep this in mind in any ROE-related studies in the future.
Is there a reference for benchmark ratio levels??
Hello Triggerfox2001
Since there is no standard definition of the benchmark, it is just an assumption to understand a "What if..?" scenario. We strongly advise you to not take reference of the values in your own strategy.
Thanks for taking time out to read the article!
This study has surviorship bias as you knew these stocks survived but there were many in Nifty 50 historically since 2014 which are no longer part of the index.
Hello theschrodingercat,
You are absolutely correct with this statement. This is a hypothetical study on a "What if...?" scenario which was backtested on limited data. The purpose was to understand how ROE/ROCE works in stock selection.
Thanks for taking time out to read the article!
U have compared 5 year ROCE of today whereas u should take 5 year ROXE of 2009 to 2014 as u would have started SIP in 2014 hence u don't have future data ofcourse those who have greater roce will have performed great in the past
Hello Meet,
This is a hypothetical study on a "What if...?" scenario which was backtested on limited data. The purpose was to understand how ROE/ROCE works in stock selection.
But nonetheless, this is a good observation and we will keep this in mind in any ROE-related studies in the future.
Thanks for reading the article!