Understanding the local, regional and global StockRank Settings

11th Aug '16 by PhilHofGrowYourDough

5 comments 7649 reads

Hi Stockopedia Team,

As a cross-regional subscriber I'm just considering the impact of the local/regional/global StockRank setting. You provide some help documentation ... http://help.stockopedia.com/knowledgebase/articles...

So with a local setting (which I'm not using by the way) any stock I filter in my multi-region subscription would be framed within that local subset (e.g. the UK market)? Using this setting in a cross-regional subscription am I effectively asking for "the best stocks in my universe relative to my local market". Is that correct? So Apple would be scored in relation to the UK market?

With a Global setting any stock I filtered in my multi-region subscription would be framed against :

all stocks in the Stockopedia universe? which is potentially growing as new regions are added OR
all stocks in my the subscription universe?

With either of these settings when filtering I guess I'm asking for "the best stocks in the universe (which is to be defined)". I guess this has the advantage of directing you towards the best markets in the world but this disadvantage of potentially limiting your selections if the universe is considered to be the whole universe of Stockopedia stocks.

With a Regional setting which is my preference) any stock is filtered against that stock's region, e.g. Apple is ranked against all of North America and Saracen Mineral Holdings is ranked against all of Australasia In effect when filtering I'm asking for "the best stocks in that region". The disadvantage might be that you pick an apparently good stock in a dog of a region.

I'd appreciate if you could clarify the few queries I have.

Thanks
Phil

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Edward Croft

11th Aug '16

Phil...

So with a local setting (which I'm not using by the way) any stock I filter in my multi-region subscription would be framed within that local subset (e.g. the UK market)? Yes this is correct.
Using this setting in a cross-regional subscription am I effectively asking for "the best stocks in my universe relative to my local market". Is that correct? So Apple would be scored in relation to the UK market? No - local ranks calculate each stock against their own local ranking set. So Apple would be ranked against the US. UK stocks versus the British Isles. So when screening you have to be aware that a 90+ cutoff will be giving the "10% best stocks in each of their local ranking sets".
With a Global setting any stock I filtered in my multi-region subscription would be framed against? All global stocks in our coverage universe.

Obviously it's not ideal that stocks have multiple rankings... it creates confusion when people talk to each other about the same rank with a different number... so we've tried to limit the set to these three local, regional and global planes. Ultimately the majority of subscribers are 'local' subscribers - they want the top 10% of stocks in their market. I'd recommend using regional or global ranks for cross region subscribers.

In future we have goals to do the following:

Provide custom universes... so that users will be able to create their own ranking systems across any universe they wish for. No idea when this will happen as we aren't working on it yet, but it will happen when we have capacity to do it.
Create Regionally Optimised StockRanks - basically some factors work very well in some regions, others work better in others. Our StockRanks are standardised globally at the moment. In future we'd like to make them more dynamic and receptive to local factor trends. This is again some time off, but we're doing R&D & database work constantly to achieve this goal.

Hope that helps ?

PhilHofGrowYourDough

Thanks Ed

So in summary ...

Local ... each stock is compared to its local market, e.g. BP.L against UK market and Apple against US market

Regional ... each stock is compared against its region, e.g. BP against Europe and Apple against North America

Global .. each stock is compared against the total universe of Stockopedia stocks covering Europe, North America, Australasia, India, Far East and potentially more to come

So this means ...

Local will provide best stocks in a market, e.g. UK, Europe, US, Canada, India, Australasia, etc.

Regional will provide best stocks in a region (but you might not have full access to all of the stocks in that region, e.g. UK only subscription with no Europe subscription or a US subscription with no Canadian subscription

Global will provide best stocks in the total universe (but again you might not have access to that full universe)

More thoughts on this ...

I have been using the Regional setting with subscriptions to UK, Europe, US and Australasia but I'm tempted to move to Global as this will sieve the whole universe and deliver the 'best' global companies that match my criteria from my subscription universe rather than the best within a market/region.

I'll monitor the number of selections being produced by my screens and whether this excludes some markets. For example with my settings on Regional, it's been quite a while since I've had a UK stock match. The most recent was Liontrust Asset Management (LON:LIO). Not that this is a big problem for me. It might be appropriate to be steered away from a particular market.

If my screens produce no selections on the Global setting I have three options:

Wait until they do
Extend my universe (which is something I've done in the past, first buying a European subscription, then US and more recently Australasia)
Go back to a Regional setting

I think a nice screening feature would be a notification that says ...

There are ...

8 more stocks that match your screen criteria in the European region
2 more stocks that match your screen criteria in the Canadian region

alan000@yahoo.com

30th Aug '16

The performance of the Stock Ranks since inception in April 2013 has been hugely impressive, which goes without saying. The million dollar question is how representative a period the last three and a half years have been. I have seen reference to charts on the Sharelock Holmes site which go back 10 years, and James O Shaughnessy's "What Works on Wall Street" which analyses between 1963 and 2009, and the principle of top decile beating 9th decile beating 8th decile etc etc in the long term.
The only place I have seen an inconsistent performance of the Stockopedia deciles is in the "US" section of the stock ranks QVM perfomance graph. This shows the 90+ rank in the middle of the deciles performance, and only up around +5% since April 13. The very best decile has returned only c20% according to that graph. However,. the total S&P500 has risen from 1500 top 2200 over that period...so the decile performance graph doesn't seem correct in that context. It must be something I have not understood correctly, and would appreciate anyone putting me straight!

alexio

31st Aug '16

I've wondered that too. I don't think you are misunderstanding it. Unless there is a glitch, those are the correct figures.

The question is why is this? What I have noticed is that there are a ridiculous number of highly ranked stocks in the US market. There are 100+ stocks ranked 98/99 alone compared to the UK which only has 100 stocks ranked 86-99. There are 10,000 stocks listed in the US compared to 2000 in the UK so you would expect more highly ranked ones, but not at those levels.

So something does seem a bit up with how the US ones are calculated? Obviously not being privy to how they are actually calculated, but Edward does allude to it above in that the ranking system is standardised across all regions. Certainly seems that the USA ranks arent discriminatory enough the way they are currently calculated.

Understanding the local, regional and global StockRank Settings

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PhilHofGrowYourDough

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