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Through the global financial meltdown, the shareholders and business managements came to emphasize the risk management. In 2008, AS index was demonstrated by Robert J. Aumann and Roberto Serrano. AS index can be used to calculate the risk of a gamble itself. Thus, it helps a lot to manage and quantity risk.
In this study, first, the Index of Strong Buy, demonstrated by Huang,Tzeng and Wang in 2012, is used as an index to calculate the risk of fourteen financial holding companies from 2010 to 2012. The larger the Index of Strong Buy, the lower the risk is, and vice versa. Second, the Index of Strong Buy is used to find the correlation between their returns and financial variables.
The study shows the mean Index of Strong Buy of bank-related financial holding companies is higher than securities-related financial holding companies and insurance-related financial holding companies. The result indicates that the risk of bank-related financial holding companies is lower than others. Furthermore, it shows there is a positive correlation between Index of Strong Buy and P/E ratio of financial holding companies. Also, there is a positive correlation between Index of Strong Buy and their yields. However, between Index of Strong Buy and P/B ratio and between Index of Strong Buy and liability ratio are negative correlations. The R-square of the Sales growth rate and the comments from securities specialists is low. It lacks of obvious explanation. At last, there is a positive correlation between Index of Strong Buy and daily average returns. Nevertheless, there is a negative correlation between Index of Strong Buy and STDEV of stocks return. There is a negative correlation between Index of Strong Buy and VARIANCE of stocks return.
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