Absolute Return

Absolute return doesn’t take into account the rate of return over a period of time. Absolute return value is like measuring how many kilometers you traveled while CAGR is like measuring how many kilometers per hour you traveled

As an illustration let us suppose you bought share of TCS at 1800 and sold it 1880 .How much percentage return did you generate? Use Absolute return when your time frame is for a year or lesser. To know return we will use the formula below.

The formula to calculate the same is [Ending Period Value / Starting Period Value – 1]*100

=[1880/1800-1]*100

=0.044*100

=4.44%

This is return that your trade or investment has generated in Absolute terms.

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