Complexity Economics

Rating a Company Based on Its Balance Sheet AND Stock Markets

Traditional rating of corporations is based on analysis of financials statements such as Balance Sheets, Cash Flows and Income Statements. Traders, on the other hand, look at stock performance, analyze trends, make projections. Often there is no time to look at Balance Sheets as things happen at Internet speeds. While trading takes place a thousand times per second, traditional rating is performed once a year when the Consolidates Balance Statement is published.

Recently, London-based Assetdyne has established a new form of Resilience Rating based exclusively on the performance of a company’s stock – a radically innovative high-frequency rating mechanism.

Ontonix has recently come up with a new rating methodology which brings together both worlds – Integrated Resilience Rating. Basically, we blend quarterly financial statements with quarterly stock market performance. This is what it looks like in the form of an integrated Business Structure Map:

The first 13 nodes  correspond to stock market-specific information. The remainder come from a Balance Statement. The Complexity Profile below – which provides a quantitative and natural ranking of the relevance of each parameter in the map – shows in the case in question “Divided” is as important as, for example “Assets” – both have a footprint of approximately 7% on the Integrated Resilience Rating.
More examples of Integrated Resilience Ratings are available here.
Quarterly Integrated Resilience Rating is now offered to public companies on a subscription basis. For more information contact us.

Established originally in 2005 in the USA, Ontonix is a technology company headquartered in Como, Italy. The unusual technology and solutions developed by Ontonix focus on countering what most threatens safety, advanced products, critical infrastructures, or IT network security - the rapid growth of complexity. In 2007 the company received recognition by being selected as Gartner's Cool Vendor. What makes Ontonix different from all those companies and research centers who claim to manage complexity is that we have a complexity metric. This means that we MEASURE complexity. We detect anomalies in complex defense systems without using Machine Learning for one very good reason: our clients don’t have the luxury of multiple examples of failures necessary to teach software to recognize them. We identify anomalies without having seen them before. Sometimes, you must get it right the first and only time!

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