I need the formula to calculate Drawdown recovery percentage showing in this picture.
If you know please share. Thank you...
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1 Answer
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Suppose the number in the first column is x, then the y value in the second column should be calculated as;
y = x / (1 - x)
Hope this helps
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1$\begingroup$ Proof: After a drop of x followed by a rise of y, the price has been multiplied by $(1-x)(1+y)$. For the price to be back to the same level as before this product must be equal to 1, therefore we have the equation $(1-x)(1+y)=1$. Solving this for y we get $y=\frac{x}{1-x}$ QED $\endgroup$– nbbo2Commented Mar 23, 2016 at 0:56
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1$\begingroup$ You are welcome. Another, equivalent, formula that I find easier to remember (and use with a calculator) is $y=-1+\frac{1}{1-x}$. For example x=0.2: Enter 1, subtract 0.2, take the inverse, subtract 1, you get 0.25. Very easy if your calculator has an inverse key. $\endgroup$– nbbo2Commented Mar 23, 2016 at 14:18