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Correlation between P/E ratio and returns over different holding periods

Goal is to understand how P/E ratio has been over the period and find whether the P/E ratio plays a role in the returns a user can get over different periods of staying invested

How to run:

Clone the repo

git clone https://github.com/krishnakuruvadi/data-viz/
cd data-viz

Create a virtual environment

python -m venv ./venv
source venv/bin/activate

Install the pre-requisites

pip install -r requirements.txt

Launch notebook

jupyter notebook

Terminology:

NIFTY 50:

A diversified 50 stock index accounting for 13 sectors of the Indian economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.

Price-to-earnings (P/E) ratio:

P/E ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The P/E ratio helps investors determine whether the stock of a company is overvalued or undervalued compared to its earnings. The ratio is a measurement of what the market is willing to pay for the current operations as well as the prospective growth of the company. If a company is trading at a high P/E ratio, the market thinks highly of its growth potential and is willing to potentially overspend today based on future earnings.