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.