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Can someone please correct my maths

Discussion in 'General Investing Discussion' started by grinners, 23rd Feb, 2012.

  1. grinners

    grinners Member

    23rd Feb, 2012
    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.
  2. Waimate01

    Waimate01 Well-Known Member

    26th May, 2008
    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).