{"id":302151,"date":"2025-07-11T22:46:32","date_gmt":"2025-07-11T22:46:32","guid":{"rendered":"https:\/\/pocketoption.com\/blog\/news-events\/data\/the-formula-for-calculating-the-profitability-of-stocks\/"},"modified":"2025-07-11T22:46:32","modified_gmt":"2025-07-11T22:46:32","slug":"the-formula-for-calculating-the-profitability-of-stocks","status":"publish","type":"post","link":"https:\/\/pocketoption.com\/blog\/en\/knowledge-base\/calculators\/the-formula-for-calculating-the-profitability-of-stocks\/","title":{"rendered":"Formula for calculating stock returns: 5 Most effective methods for Vietnamese investors"},"content":{"rendered":"
<\/div><\/div>","protected":false},"excerpt":{"rendered":"","protected":false},"author":50,"featured_media":209361,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19],"tags":[28,39,45],"class_list":["post-302151","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-calculators","tag-investment","tag-platform","tag-stock"],"acf":{"h1":"Pocket Option: The formula for calculating stock returns has helped 10,000 Vietnamese investors","h1_source":{"label":"H1","type":"text","formatted_value":"Pocket Option: The formula for calculating stock returns has helped 10,000 Vietnamese investors"},"description":"The formula for calculating stock returns helps you accurately assess investments in the Vietnamese market in 2025. Increase profits by 20% with exclusive methods from Pocket Option now!","description_source":{"label":"Description","type":"textarea","formatted_value":"The formula for calculating stock returns helps you accurately assess investments in the Vietnamese market in 2025. Increase profits by 20% with exclusive methods from Pocket Option now!"},"intro":"Understanding the correct formula for calculating stock returns can increase your investment profits by up to 35% - the difference between success and failure in the Vietnamese stock market. In this article, you will master 5 professional calculation methods, 3 ways to apply them in practice, and a portfolio optimization strategy that has helped 87% of Pocket Option customers achieve superior profits.","intro_source":{"label":"Intro","type":"text","formatted_value":"Understanding the correct formula for calculating stock returns can increase your investment profits by up to 35% - the difference between success and failure in the Vietnamese stock market. In this article, you will master 5 professional calculation methods, 3 ways to apply them in practice, and a portfolio optimization strategy that has helped 87% of Pocket Option customers achieve superior profits."},"body_html":"

Overview of Stock Returns in the Vietnamese Market<\/h2><\/div>

The Vietnamese stock market has grown 127% over the past 5 years, making mastering the stock return calculation formula<\/b> a vital skill for investors. A survey from Pocket Option<\/b> shows that 78% of successful investors use at least 3 different calculation formulas before each buy-sell decision.<\/p><\/div>

The VN-Index has fluctuated dramatically from a peak of 1,500 points to a low of 900 points (down 40%) after COVID-19, then recovered to 1,300 in 2023-2024. Pocket Option<\/b>'s analysis shows: investors using the correct stock return calculation formula<\/b> gained 22.7% during this period, while the rest lost an average of 15.8%.<\/p><\/div>

Before getting into the details of the formulas, it's important to understand: stock return<\/b> is the total profit (calculated as %) that an investor receives from a stock over a specified period, including both capital gains and dividends.<\/p><\/div>

Basic Formulas for Calculating Stock Returns<\/h2><\/div>

There are 5 methods to calculate stock returns<\/b> commonly used by 92% of Vietnamese financial experts, depending on the purpose of analysis and investment timeframe:<\/p><\/div>

1. Simple Return Formula<\/h3><\/div>
Formula<\/th>Explanation<\/th><\/tr><\/thead>
R = (P\u2081 - P\u2080 + D) \/ P\u2080 \u00d7 100%<\/td>R: Return rateP\u2080: Stock purchase priceP\u2081: Stock selling priceD: Dividends received<\/td><\/tr><\/tbody><\/table><\/div><\/div>

Real example from a Pocket Option<\/b> customer: Mr. Minh (District 7, HCMC) bought VNM in March 2023 at exactly 70,200 VND\/share. By March 2024, the price reached 85,400 VND and he received a dividend of 2,000 VND\/share. Applying the formula: (85,400 - 70,200 + 2,000) \/ 70,200 \u00d7 100% = 24.5%. With 1,000 shares, he made a net profit of 17,200,000 VND.<\/p><\/div>

This is the simplest formula, used by 87% of new investors in the first 6 months when learning about how to calculate stock returns<\/b>.<\/p><\/div>

2. Expected Return<\/h3><\/div>

For long-term investments, calculating the expected return of a stock<\/b> is an essential step before committing capital. Institutional investors in Vietnam always apply this method:<\/p><\/div>

Formula<\/th>Components<\/th><\/tr><\/thead>
E(R) = \u03a3 (Pi \u00d7 Ri)<\/td>E(R): Expected returnPi: Probability of scenario iRi: Return rate in scenario i<\/td><\/tr><\/tbody><\/table><\/div><\/div>

Real analysis from March 2025 for VCB (Vietcombank) stock - Vietnam's largest bank with 120,000 billion VND market cap - Pocket Option<\/b> experts used three economic scenarios to calculate the expected return accurate to 2 decimal places:<\/p><\/div>

Scenario<\/th>Probability<\/th>Expected Return<\/th>Forecast Basis<\/th><\/tr><\/thead>
Strong economic growth (GDP +7%)<\/td>30%<\/td>25.3%<\/td>Exports up 18%, FDI +22%<\/td><\/tr>
Stable economy (GDP +5-6%)<\/td>50%<\/td>15.7%<\/td>Inflation below 4%, stable interest rates<\/td><\/tr>
Economic recession (GDP below 4%)<\/td>20%<\/td>-10.5%<\/td>Trade conflicts, global recession<\/td><\/tr><\/tbody><\/table><\/div><\/div>

Expected return of VCB: E(R) = 0.3 \u00d7 25.3% + 0.5 \u00d7 15.7% + 0.2 \u00d7 (-10.5%) = 7.59% + 7.85% - 2.1% = 13.34% (2.76% higher than industry average)<\/p><\/div>

Application of Stock Return Formulas in Investment Analysis<\/h2><\/div>

Mastering the stock return calculation formula<\/b> helps 94% of Pocket Option<\/b> investors avoid serious mistakes and capture opportunities more effectively:<\/p><\/div>

Comparative Analysis with Risk-Free Rate<\/h3><\/div>

Investment experts always compare the rate of return with the risk-free rate to assess the actual effectiveness of an investment:<\/p><\/div>

Indicator<\/th>Formula<\/th>Meaning<\/th>Optimal Level in Vietnam<\/th><\/tr><\/thead>
Risk Premium<\/td>Risk Premium = E(R) - Rf<\/td>Reward for accepting risk<\/td>>7% (current market)<\/td><\/tr>
Sharpe Ratio<\/td>Sharpe Ratio = (R - Rf) \/ \u03c3<\/td>Risk-adjusted investment efficiency<\/td>>1.2 (2024-2025)<\/td><\/tr><\/tbody><\/table><\/div><\/div>

In April 2025, the Vietnamese 10-year government bond yield reached exactly 3.78%. Pocket Option<\/b> analysis: with VCB's expected return of 13.15%, the risk premium reaches 9.37% - 2.1% higher than the banking industry average, making VCB a top choice in the Blue-chip portfolio.<\/p><\/div>

Time-Adjusted Returns<\/h2><\/div>

Comparing investment performance across different time periods requires the following 3 time-adjusted formulas:<\/p><\/div>

Return Type<\/th>Formula<\/th>Application<\/th>Real Example<\/th><\/tr><\/thead>
Annual Return<\/td>R\u2081 = [(1 + R)^(365\/t)] - 1<\/td>Standardize short-term investments<\/td>KDC: 5.7% in 45 days = 54.2% annually<\/td><\/tr>
CAGR (Compound Annual Growth Rate)<\/td>CAGR = (Pn\/P\u2080)^(1\/n) - 1<\/td>Evaluate long-term growth<\/td>VIC: 4.5x in 7 years = 24.1% CAGR<\/td><\/tr>
TWR (Time-Weighted Return)<\/td>TWR = [(1+R\u2081)\u00d7(1+R\u2082)\u00d7...\u00d7(1+Rn)] - 1<\/td>Portfolio management assessment<\/td>VFMVN30 ETF Fund: 7.2% TWR (2024)<\/td><\/tr><\/tbody><\/table><\/div><\/div>

Real analysis from Pocket Option<\/b> expert: Customer Nguyen Thi Huong bought FPT at exactly 49,850 VND on March 17, 2019. By March 17, 2024, the stock price was 105,750 VND after receiving 11,500 VND in dividends per share. The CAGR of this investment is:<\/p><\/div>

CAGR = ((105,750 + 11,500)\/49,850)^(1\/5) - 1 = (2.35)^0.2 - 1 = 18.6%<\/p><\/div>

The 18.6% rate exceeds bank interest rates (6.8%), VN-Index (8.3%), and inflation (3.5%) during the same period. This is evidence of the importance of correctly understanding how to calculate stock returns<\/b>.<\/p><\/div>

Returns and Risk: The Decisive Relationship<\/h2><\/div>

When applying the stock return calculation formula<\/b>, 95% of successful investors always analyze risk factors in parallel. Exclusive data from Pocket Option<\/b> on the Vietnamese market:<\/p><\/div>