Stock Price Analyzer: Risk vs. Reward

Published: January 9, 2015 at 9:18 am

Last Updated on September 4, 2018

Use this Excel sheet to analyze the risk vs. reward of investing in a stock in comparison with an index. The analysis is based on price history (adjusted for dividends, splits and bonuses) and is a spin-off the popular Mutual Fund Risk-return analyzer

Two versions of the sheet are available:

  • The ‘annual’ version in which risk and reward metrics are computed for each annual year for the last  8 years and SIP and lump sum returns are calculated for the 15 years (if available of course).
  • The ‘investment duration’ version calculates risk and reward metrics for investment durations ranging 1-8 years and SIP and lump sum returns are calculated for durations ranging 1-15 years.

The delievery brokerage is take into account while calculating returns.

The sheet pulls stock price data from Money Control. The earlier version of the historical stock downloader has now been updated with automatic retrieval of moneycontrol stock codes.

As pointed out by  Krishna and Jignesh, moneycontrol is better than Yahoo Finance in this regard. Which is a pity because it is easier to get it from the latter.

Price data from all BSE indices can be used for comparison. The standalone version of this module is here

Since the stock price is adjusted for company action, it is better if the index chosen for comparison is the total returns index and not the price index.

The sheet has instructions for interested users on how to work with  total returns data.

The metrics used are identical to that used in the mutual fund analyzer tool:

Beta, standard deviation, alpha, Sharpe ratio, Treynor ratio, information ratio, omega ratio, Sortino ratio, upside and downside capture ratios and the Ulcer index

To get a brief idea about these metrics, users can consult:
Mutual Fund Risk-return analyzer
Mutual Fund analysis with the Ulcer Index
Simplify Mutual Fund Analysis with Upside/Downside Capture Ratios
 Caution must be exercised while interpreting results.  Invariably most mutual funds outperform their indices. The same is true for a good business but the margin of outperformance maybe much higher. So one could own such a business at greater risk. For mutual funds the inevitable debate/comparison is between active vs. passive(the index used for comparison).

In the case of stocks, one looks for consistency of performance (with the ‘annual’ version) and the kind of long-term reward (and risk expected – with the ‘investment duration’ version). A stock outperforming the index means little here. Unfortunately, risk-reward calculations require an index.

A stock A vs. stock B risk-reward comparison tool will be published soon.

Here are some screenshots of the sheets and results obtained with Asian Paints and BSE 100 (the index it is part of). Asian paints is used foe representation purposes only. I do not hold stocks of this company.

Stock price download entry page
Stock price download entry page
Adusted Stock price data
Adusted Stock price data
SIP and lump sum return calculation page
SIP and lump sum return calculation page
Annual Risk-reward score
Annual Risk-reward score
Annual returns
Annual returns
Ulcer index for last 8Y. Since price index is used outperformance is exaggerated.
Ulcer index for last 8Y. Since price index is used outperformance is exaggerated.
Capture ratios for difference investment durations
Capture ratios for difference investment durations
Risk-reward score different investment durations
Risk-reward score different investment durations
Returns for difference investment durations
Returns for difference investment durations


Download the stock price analyser

Annual version

Investment duration version

Comments and suggestions are welcome

Do share if you found this useful

For a short of time, enjoy a 40% discount on our online course: Goal-based portfolio management! Join 1863 members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment of Rs. 3000 Rs. 1800 only. No recurring fees! Life-long access to videos (10+ hours content)  in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Did you know? We have more than 900+ videos on YouTube to explore! Join our YouTube Community!

Use our Robo-advisory Excel Template for a start-to-finish financial plan!

Join our courses in exclusive Facebook Groups!

  • 520+ members are now part of our new course, How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner wanting more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills, building a community that trusts you and pays you!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!) or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners on a monthly basis
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps