TradeDirect provides you with investment tips from theScreener twice a week. Thanks to an approach based on the consensus of analysts, theScreener.com is an ideal tool for finding and evaluating securities rapidly, whether you are pursuing a long-term investment objective or looking for short-term trading opportunities.
With the analyses provided by theScreener.com, you have everything you need to make your trades after having made your own in-depth analysis of of a security’s quality.
Three types of information supplied by theScreener will help you to manage your portfolio: model portfolios with 3 different profiles, opinions on over 5,000 stocks and information on the risks involved
Model portfolios in detail
Easy to use: The model portfolios are very easy to use. You can easily understand the investment strategy and implement your chosen model portfolio thanks to the direct trading links to each share in the model portfolio. You have 3 investment strategies to choose from:
This portfolio comprises a maximum of six stocks and limits its investment universe to SMI stocks. The portfolio's methodology is trading-oriented, investing in stocks with strong fundamentals and good technical analysis results.
This portfolio, which contains no more than five stocks, invests primarily in secondary stocks on the Swiss market but does not exclude SMI blue chips. It is also trading-oriented, with a more aggressive investment style than the SMI 6 approach above. Volatility is greater and the number of trades is higher.
This investment strategy focuses on fundamentals. With a maximum of ten stocks, this portfolio is strongly value-oriented and targets strict risk control on high-quality stocks.
Automatic management by software
You can consult transactions carried out using the models and place the same orders with TradeDirect. After each update, predefined buy and sell criteria are rigorously applied for each strategy. Portfolios are reviewed twice a week, and after each sell signal the software programs search the databases for new buy opportunities in line with the investment strategy defined by the user.
How to choose and implement an investment strategy ?
Apart from the returns obtained and the stocks that make up each portfolio, the choice of investment strategy should be made on the basis of two criteria: portfolio volatility and rotation/turnover.
Volatility is an indicator of risk: the higher the volatility, the more the portfolio will fluctuate relative to the benchmark index.Rotation (or turnover) is an indicator of the average number of trades that the investor is expected to make a year (a figure of 80% for a portfolio of 10 stocks means an average of eight buy/sell transactions a year).
The next step is implementing the selected portfolio model by buying the same stocks. Although getting the weightings exactly right has little impact on portfolio performance, it is important to make the necessary trades speedily and not wait for new buy signals. The reason for the need to rapidly implement the model is that an uninvested portfolio can end up lagging far behind its benchmark if the cash component is too large.
Once the portfolio has been constructed, the user will be able to follow the buy and sell signals generated automatically after each update (on Mondays and Thursdays). These signals are given for each portfolio under the Transactions tab. Please remember that implementation is not automatic. The final decision to buy or sell via an order rests with the user alone.
How do I assess a stock's investment profile?
Reports from theScreener provide TradeDirect customers with a detailed analysis of over 5,000 stocks from around the world, making it easy to evaluate each stock's upside and downside. The opinions provided are based on fundamental and technical analysis of the stocks, which is easily understandable thanks to a rating system.
Find all the explanations you need in the Analyze Actions user guide. More information at theScreener.com.
Risk is determined by measuring beta, volatility, the bear market factor and the bad news factor against the global benchmark. ABB example, with data as at 25 January 2012 Beta is often used as a risk measure When it is larger than 100, this means that a security is more volatile and hence more risky.
A Beta of 1.31 indicates that for every 1% change in the index, ABB Ltd varies by 1.31% on average. However, an analysis of beta coupled with that of the correlation is even more informative.
Correlation is the degree of similarity of a security’s fluctuations in relation to Its benchmark index. ABB Ltd has a correlation rate of 0.90. This means that 90% of a security’s movements are driven by fluctuations in the Index. ABB Ltd is strongly correlated with DJ Stoxx 600. Volatility is also used as a risk metric. It measures the amplitude of upward and downward movements in a security or index. The higher the volatility, the more the security is considered as risky. The 1-month annualized volatility of ABB Ltd is 18.9%, that of the DJ Stoxx 600 is 11.4% and that of the global Produits & Services benchmark Industrials group is 12%. By way of comparison, the average volatility of the securities making up the benchmark index is sharply higher, at 26.7%. Risk factors in downside markets
The bear market factor measures the behavior of a security in phases of market decline. In this setting, ABB Ltd. moves down in the same proportions on average as the DJ Stoxx 600. This behaviour reveals the moderately risky nature of the security in periods of market correction. The risk factor in rising markets.
The Bad News Factor measures the corrections of a security in bullish market phases. In such cases, the market penalizes ABB Ltd only slightly in the event of specific pressure on the company. When the security falls against the market trend, it sheds an average of 2.09%. Summary of risk analysis Overall, the risk incurred by the investor on ABB Ltd may be judged as average; this has been the case for over a year.