I have decided to compare two different companies to make our analysis more obvious. We will reuse our quote from last week of BHP, and compare it to EVN.
BHP
EVN
%Chg: This analysis has already been calculated for you. But the percentage change on a stock can display the direction and magnitude of the price movement.
Bid-Ask Spread: The Bid-Ask Spread is the difference between the Bid and Offer. For BHP this is the offer of $35.65 minus the bid price at $35.63, equalling a spread of $0.02. In our second example for EVN, the offer is $0.725 minus the bid price of $0.68, equalling $0.045. The Bid-Ask Spread is important as it gives a guide to the liquidity of the stock or asset. The liquidity refers to degree that an asset can be resold quickly without reducing its price. For BHP the spread is only 0.05% of the offer price. Whereas for EVN, the spread is 6.2% of the offer price. This not only indicates that if you bought one of the stocks you would instantly lose that amount if you sold it straight away, but also that there is less consensus on how much EVN is worth compared to BHP.
Open/High/Low: A comparison of the open/high/low prices can yield insight as to how much
volatility there is in the price of the assets. It is best to do this in a percentage of the total asset price when comparing multiple stocks.
Volume: The volume on a trading day can be compared with historic data to see if there is significant weight behind a price movement. If it is above average it may mean there is a general consensus within the market that the stock should go in that direction. If it is below average, it may indicate a weaker consensus and that a price reversion may occur.
