Securities Market Turnover Ratio (TRO)

Part: A

Market Tracker to find buy & sell points: Turnover Ratio(TRO)!!!

This research intends to explore sell & buy points in the market by turnover ratio and measures the performance& relationshipsof the ratio along with market return & riskthat of regular active trading days based on DSEmarket data from June 2004 to July 2015.

 

Have you ever noticed how some stocks seem to soar for months on little or no news while other stocks can receive ongoing great news and hardly move higher at all? The ratio for comparing the supply and demand – called the “Turnover Ratio”.

 

  • The correlation between the turnover ratio with DSEX return is going towards positive with 0.49
  • The correlation between the turnover ratio with return to risk ratio is going towards positive with 0.46

 

Part: B

Stock Market Turnover ratio(%) describes how much turnover is generated on per unit of market capitalization. It tells us how potential a stock is in terms of liquidity & market sentiment.

Interpreting Turnover Ratio for Investment Decisions

Higher Turnover Ratio indicates higher market risks. It’s wise to off-load securities when turnover ratio is extremely high. Consider 0.21% as RIL Benchmark.

Lower Turnover ratio indicates lower market risks. It’s wise to buy securities

When turnover ratio falls significantly. Consider 0.21% as RIL Benchmark.

 

Disclaimer: This publication is produced by Research and Innovation Lab at Royal Capital Limited (RCL) solely for the information of Clients of RCL. Clients are expected to make their own investment decisions using any information contained herein. The contained information in the report should not be interpreted as an offer to sell, or a solicitation of any offer to buy any investment. Projections of potential risk is based on published information but does not guarantee of any actual risk or return to be materialized.

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