Can someone please correct my maths

Discussion in 'Share Investing Strategies, Theories & Education' started by grinners__, 23rd Feb, 2012.

Join Australia's most dynamic and respected property investment community
  1. grinners__

    grinners__ Member

    Joined:
    1st Jul, 2015
    Posts:
    9
    Location:
    Melb, Vic
    I don't know what I am doing wrong here:

    XTO = Top 100 Aus Companies by capitalisation

    XKO = Top 300 Aus Companies by capitalisation

    XSO = Top 300 Aus Companies by capitalisation minus top 100 companies (ie: companies 101 to 300).

    Therefore, shouldn't the index value of XTO + XSO = XKO?

    XTO + XSO = XKO
    100 + (101-300) = 300

    But it doesn't...

    3493 + 2487 /= 4294

    Thanks guys.
     
    grinners__, 23rd Feb, 2012
    #1
  2. Waimate01

    Waimate01 Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    151
    Location:
    Sydney
    They're indices, not physical quantities. An index is a notional value calculated in some systematic way that hopes to reflect something real. But two different indices are two different types of fruit, and the rules of arithmetic do not necessarily apply when mixing them.

    There's probably no reason why those indexes could not be constructed in such a way as to allow interindex arithmetic, but it would seem that was not a goal of the index designers (and thinking about it would be quite hard to achieve over time).
     
    Waimate01, 24th Feb, 2012
    #2