Should stocks be reinstated or ex-rights before looking at them? To see what the difference is between forward restoration and backward restoration, let’s follow the editor of Lingsan Finance Network to learn about it.
Should stocks be reinstated or ex-rights before viewing?
To restore rights forward is to keep the current price unchanged, reduce the previous price, and move the K line before the ex-rights downward to make the graphics match and maintain the continuity of the stock price trend.
Reverting backward means keeping the previous price unchanged and increasing the future price.
The most obvious difference between the two is that the current cycle quotation for forward restoration is exactly the same as the price displayed on the K-line, while the quotation for backward restoration is mostly lower than the price displayed on the K-line.
For example, if the current price of a certain stock is 10 yuan, and before that, 10 shares were given out for every 10 shares, the ex-rights price of the former is still 10 yuan, while the price of the latter is 20 yuan.
Before restoration: price after restoration =
(Price before restoration of rights – cash dividend) + price of allotment (new) shares × change ratio of circulating shares
÷(1+change ratio of circulating shares)
Post-restoration: price after restoration = price before restoration × (1 + change ratio of circulating shares) – price of allotted (new) shares × change ratio of circulating shares + cash dividend
Which reference value is better varies from person to person.
Personally speaking, "For the ultra-long term, there is no need to restore rights. Short-term is a bit necessary. After all, sudden gaps cause some indicators to change. But it is only limited to a certain period of time after ex-rights. If you are skilled, there is no need to restore rights. This requires long-term experience, and you will have some judgment experience.
Generally, it is more conducive to the analysis of stocks to use pre-resumption of rights, but timely selection must be made based on specific circumstances, as follows:
