The DAX (Deutcher Aktien Index) is the German index measuring performance of 30 German largest companies trading on the Frankfurt Stock Exchange. In order to qualify for a listing, the companies are reviews by their market capitalization as well as the volume of orders. The list is being revised quarterly to add yet more companies to it. The companies in the DAX index make up about 75% of the market cap on the Frankfurt stock exchange.
World-famous car manufacturers like Volkswagen, BMW, and Daimler are on the DAX index. International companies like Adidas, Siemens, Lufthansa, and SAP are also on the index, to name a few.
Alongside with the British and American indices, the DAX index is one of the commonly cited benchmarks. Great popularity of this instrument lies in the fact that it can be traded longer hours and traders can choose the most convenient time.
Having added the DAX index to your portfolio, you can ensure a great diversity. However, the index differs from the Dow Jones Industrial Average, for example, which also has 30 types of shares on it. The DAX is weighted by market capitalization – the size of the firm is taken into account when making a decision on changes in the average trading volume.