Good doesn’t always follow bad

We examine the consecutive year performance to test the theory that this year’s losers will be next year’s winners. We looked at all operating companies trading on the ASX with a market cap of at least $100 million on the 1st January 2023 and compared the change in market cap during 2023 against their year-to-date growth (16th December 2024) to see if there was a negative correlation between the change over each time period.

Four hundred ninety-two companies fit our criteria, and as shown in Table 1, there was no correlation or covariance between the performance in 2023 and YTD, or between the performance in 2022 compared to 2023.

Table 2 below shows the performance breakdown for the 492 companies, with nearly an equal number of companies having two positive years (137) and two negative years (147).

A similar number also had one positive and one negative year – 110 (positive 2023, negative 2024) and 99 (negative 2023, positive 2024).

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Figure 1shows the 2023 performance (x-axis) versus 2024 year-to-date (y-axis). There isno discernible pattern or correlation between the performance of companiesacross the two time periods.

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To check that 2023 vs 2024 wasn’t an anomaly, we comparedthe market cap performance of companies in 2022 versus 2023. The results areshown in Figure 2.As is again evident, the chart reflects the correlation (0.01) and covariance(0.00) shown in Table 1.

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