Calculate Piotroski F-Score and Develop A Trading Strategy Based On It
You will learn how to calculate the Potroski F-score and then develop and backtest a simple trading strategy based on it.
Have you ever wondered how to determine the financial health of a company before investing in its stock? The Piotroski F-Score provides a simple yet effective solution to this problem. Developed by Professor Joseph Piotroski of Stanford University, the F-Score is a composite score that measures the strength of a company’s financial position based on nine criteria.
The score ranges from 0 to 9, with 9 being the highest score, indicating a strong financial position and a low probability of bankruptcy. On the other hand, a score of 0 means that the company has a weak financial position and a high probability of bankruptcy.
The F-Score has been proven to be a reliable indicator of a company’s financial health and its ability to generate positive returns. In fact, a study by Professor Piotroski found that a strategy of investing in companies with high F-Scores outperformed the market by 7.5% annually.
