PCA FOR STOCK PICKING

[Pelman08]

lets say I am an equity analyst and I want to figure out what fundamental metrics I should use when I am analyzing an industry , I can use pca on a bunch of stocks in an industry using their fundamental data , I will use metrics like return on equity book value return on assets and so on .



My question is if I ran a pca on fundamental data from stocks in an industry what should the first and second principle component represent



thank you your help will be greatly appreciated

[doomanx]

Hey guys!!!! Do my homework!