The South Korean index ended the day on the rise on February 2

This year the markets have registered a constant volatility. (Infobae)

Rising session for the KOSPI, which ended on Thursday, February 2 with increases of 0.78%, to 2,468.88 points. The KOSPI It reached the maximum figure of 2,486.20 points and a minimum volume of 2,454.60 points. The trading range for the KOSPI between its highest and lowest point (maximum-minimum) during this day it stood at 1.27%.

Taking into account the last seven days, the KOSPI marks a rise of 0.01%; Despite this, from a year ago it still maintains a decrease of 11.57%. The KOSPI it stands 0.61% below its maximum this year (2,484.02 points) and 11.28% above its minimum price so far this year (2,218.68 points).

Stock indices… What for?

A stock index is an indicator that shows how the value of a set of assets changes, so it collects data from different companies or sectors of a fragment of the market.

These indicators are used mainly by the stock markets of each country and each one of them can be integrated by firms with different specificities, such as having a similar market capitalization or belonging to the same type of business, in addition, there are some indices that only they take into account a handful of shares to determine their value or others that consider hundreds of shares.

Stock indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the return on investment in a company’s stocks and shares. Generally, if investors are not confident, stock prices tend to fall.

Likewise, they work to measure the performance of an asset manager and allow investors to make a comparison between profitability and risk; measure the opportunities of a financial asset or create portfolios.

These types of indicators began to be used at the end of the 19th century after the journalist Charles H. Dow. To carefully analyze how the shares of companies tended to rise or fall together in price, he created two indices: one that contained the 20 largest railway companies (as it was the most important industry at the time), as well as 12 shares of other types of businesses

Currently there are various indices and they can be associated based on their location, sectors, company size or even the type of asset, for example, the US Nasdaq index is made up of the 100 largest companies mostly related to technologies such as Apple. (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), Alphabet (GOOG), Tesla (TSLA), Nvidia (NVDA), PayPal (PYPL), Comcast (CMCSA), Adobe (ADBE).

How to read an index?

Each stock index has its own way of being measured, but the main component is the market capitalization of each company that integrates it. This is obtained by multiplying the value of the day of the bond in the corresponding stock market by the total number of shares that are in the hands of investors.

Companies listed on the stock market are required to present a balance sheet of their composition. Said report must come to light every three or six months, as appropriate.

Reading a stock index also implies taking into account its variations over time. New indices always start with a fixed value based on the stock prices on their start date, but not all follow this method. Therefore, it can be a source of misunderstandings.

If one index boosts by 500 points in one day, while another only adds 20, it might appear that the former performed better. However, if the first started the day at 30,000 points and the other at 300, it can be derived that, in percentage terms, the gains for the second were considerable.

These are the main stock indices

Among the main stock indices in the United States is the Dow Jones Industrial Average, better known as Dow Jones, which is made up of 30 companies. Similarly, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, there is the Nasdaq 100, which associates 100 of the largest non-financial firms.

On the other hand, the most important indices in Europe are the Eurostoxx 50, which covers the 50 most important companies in the euro area. On the other hand, the DAX 30, the main German index that contains the most outstanding companies on the Frankfurt Stock Exchange; the FTSE 100 of the London Stock Exchange; the CAC 40 of the Paris Stock Exchange; and the IBEX 35, of the Spanish stock market.

In Asia, the main stock indices are the Nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Likewise, the SSE Composite Index, which is listed as the most solid in China, made up of the most relevant companies on the Shanghai Stock Exchange. Similarly, it is worth mentioning the Hang Seung Index in Hong Kong and the KOSPI in South Korea.

With regard to Latin America, there is the IPC, which contains the 35 most consolidated firms on the Mexican Stock Exchange (BMV). At least a third of them are owned by tycoon Carlos Slim.

Another is the Bovespa, made up of the 50 most important companies on the Sao Paulo Stock Exchange; the Merval from Argentina; the IPSA of Chile; the MSCI COLCAP of Colombia; the IBC of Caracas, made up of 6 companies from Venezuela.

There are also other types of global stock indices such as the MSCI Latin America, which includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.

Similarly, there is the MSCI World, which includes 1,600 companies from 23 developed countries; the MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100, made up of the 100 most powerful multinational firms on the entire planet.

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