Overview

Due to the inherent growth in the electronic production and storage of information, there is often a feeling of “information overload” or inundation when facing the process of quantitative decision making. As an analyst your job will often be to conduct analyses or create tools to support quantitative decision making.

A principle tool used in industry, goverment, non-profits, and academic fields to compensate for the information overload is the information dashboard. Functionally, a dashboard is meant to provide a user with a central resource to present in a clear and concise manner all the information neccessary to support day-to-day decision making and support operations.

Objective

The objective of this laboratory is to plan, design, and create an information dashboard to support quantitative decision making. To accomplish this task you will have to complete a number of steps:

Delineate the necessary decision (I will do that below). Identify what information will be relevant to decision making. Find and collect the data necessary to create your visualization plan. Organize and summarize the collected data. Design and create the best visualizations to present that information. Finally organize the layout of those visualizations into a dashboard (use the flexdashboard package) in a way that conforms to the theory of dashboarding. Write a summary about what decisions you made based on the visualizations that you developed.

The Decision & Rules

You make investments for an organization; your objective is to purchase securities/commodities for the key objective of maximizing profits. You want to make an investment in securities/commodities to make some short-term gains. You are considering investing in one of any four companies, for example: Twitter (TWTR), Microsoft (MSFT), or Apple (AAPL) (don’t use these). Choose 4 companies or commodities and determine which one of the four will produce the most short-term gains. Use your imagination.

Financial Indicators

P-E Ratio - is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). This are used by investors and analysts to determine the relative value of a company’s shares in an apples-to-apples comparison.

EPS - is calculated as a company’s profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company’s profitability.

Dividend Yield Ratio - is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price.

Market Cap - it is the total dollar market value of a company’s outstanding shares of stock. The investment community uses this figure to determine a company’s size instead of sales or total asset figures.

Overview

Overall Daily Trend

Key Financial Indicator Analysis

• We have created the tables in this dashboard to better visualize and compare some of the key financial ratios and pricing changes of four stocks: JP Morgan (JPM), Tesla (TSLA), IBM (IBM) and Cigna Group (CI).

• In order to make recommendation, we have gathered data on four key financial indicators that should help us come to a conclusion. Sharing below a summary of the four:

  1. Dividend Yield: by analyzing the dividend yield of the four stocks, we can see that IBM has the highest dividend yield at close to 5%, and Tesla has the lowest one, since it does not pay any dividends. If an investor is looking for a consistent stream of dividends, investing in IBM and JPM might be the best option.

  2. Market Cap: Out of the four companies we are examining in this particular study, Tesla is the one that has the highest market cap, followed by JP Morgan Chase.

  3. P/E Ratio: Tesla is the company with the highest P/E ratio out of the four, at 52, more than double the PE ratio of the next one (IBM) which shows us that using the price of the stock and earnings of the stock, the stock of the company might be relatively overvalued. On the other hand, the stock with the lowest PE ratio is JPM. What this means is that out of the four stocks, JPM’s stock price more closely resembles the earnings of the company.

  4. Earnings Per Share (EPS): TESLA has the highest earnings per share out of the four stocks, meaning this is the stock with the highest profitability.

Individual Trend Analysis & Overall Daily Trend Conclusions

• By observing the overall daily trend chart, we can see that Cigna ended the period we are examining with the highest stock price (around 330), while Tesla ended the period with the lowest stock price after a sharp decline throughout the year.

• Additionally, by examining the daily trend chart we can see that Cigna tended to have a relatively stable and upward year of positive returns, with JPM Chase and IBM having a relatively stable year (no material growth nor decline), and TESLA having negative returns.

• For a conservative investor, by examining both charts, I would recommend investing in more stable stocks for which its price tends to show less volatility, which in this case are JPM Chase and IBM. On the other hand, for an investor that is looking for more aggressive investments, (higher volatility with potentially higher returns), we would recommend investing in Cigna since it has seen some growth over the last year, which we can assume will continue in the future.