PE Growth and Risk: Evidences from Value Investing in Thailand

Author:Paiboon Sareewiwatthana

This study employed the concept of value investing, whereby PE, PEG, and PERG ratios were used for stock screening. PE is the basic price to earnings ratio; while PEG is the PE with growth incorporated. PERG is the PEG adjusted for risk factor. The concepts based on the hypotheses that stocks with low PE ratio, low PEG, and low PERG should generate higher returns than those of the market average. Data from the Securities Exchange of Thailand during 2002-2012 were used to test the hypotheses. Returns from portfolios with low PE, low PEG, and low PERG were computed and found to be better than those of the market average. Proxies for risk, the standard deviation of return and the beta coefficients, were used to computed PERG. Portfolios of low PERG using Standard Deviation as risk proxy appeared to provide better performances than those of using beta coefficient. All in all, PE appeared to be the best screening, providing the highest returns during the period tested.

Source: Technology and InvestmentDOI: 10.4236/ti.2014.52012

About scirp

(SCIRP: http://www.scirp.org) is an academic publisher of open access journals. It also publishes academic books and conference proceedings. SCIRP currently has more than 200 open access journals in the areas of science, technology and medicine. Readers can download papers for free and enjoy reuse rights based on a Creative Commons license. Authors hold copyright with no restrictions. SCIRP calculates different metrics on article and journal level. Citations of published papers are shown based on Google Scholar and CrossRef. Most of our journals have been indexed by several world class databases. All papers are archived by PORTICO to guarantee their availability for centuries to come.
This entry was posted in TI and tagged , , , , , . Bookmark the permalink.

Comments are closed.