Equity selection

Systematic process of equity selection

The results of the relative assessment and absolute valuation of a company serve one purpose: to find stocks with the highest potential for price increases or decreases. LeanVal offers a professional equity screener for the creation of predefined or individual long and short strategies. These strategies can be tested historically in the blink of an eye. You save a lot of time and immediately get a feel for how successful your equity strategy has been in different phases of the stock market.

There are different ways to choose equities. Some investors use a systematic approach to do this, while others rely solely on their gut instinct. Again and again one finds stock portfolios that are put together randomly, for example by chimpanzees throwing darts at a target. These random portfolios attract attention when they beat the broad market and after a period of time achieve a top result compared to human fund managers. The same principle of randomness can be found in tossing a coin. Is someone who has tossed the “number” three times in a row a better coin thrower or is he just lucky?

Scientific studies show that established, liquid equity markets are particularly efficient in terms of information. But they also show that there are certain market anomalies that can occur permanently or temporarily. The most well-known anomaly is the value style: In most market phases, fundamentally undervalued value stocks can outperform so-called growth stocks. Our screener supports you in reviewing your personal strategy or it helps you to disenchant your convictions. For example, equities with a high dividend yield are not necessarily among the outperformers.

The process of equity selection

LeanVal’s research platform offers you a systematic selection process for equities. Step by step, you can choose a predefined strategy or your own strategy based on certain key figures. Then you set the universe from which the stocks will be selected. The historical back test is unique. The historical development is calculated based on historical data within a few seconds. This allows you to test your ideas quickly and easily and, if necessary, adjust your strategy afterwards. The process essentially consists of two topics: strategy selection and backtesting.

Strategy selection

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Backtesting

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This process is replicable and scalable. The selection strategy is saved and you can repeat the screening regularly, for example if you rebalance after a quarter or a year. The strategy can also be modified as required for specific industries, countries or economic areas.