Is historical data adjusted to Dividends? If not, how to calculate total returns? Need latest update

QW5712
QW5712 edited August 8 in General
From many other threads, it seems that historical data does not have dividends added to close prices. Here is an example: https://kite.trade/forum/discussion/4014/is-historical-data-dividend-adjusted

Now the issue here is, when company pays out dividends, the stock price reduces by approximately that much amount.

I am developing strategies where I need total return of the stocks for past many years. If dividends are not added to close prices, how am I supposed to calculate total returns of the stock? Because of this, there will be anomalies in the strategies.

If dividends are not added to prices, what is the purpose of having historical data? Since historical data is generally used for developing strategies and algo treading.

@sidverm has raised the same issue in the comments in this thread as well: https://kite.trade/forum/discussion/4014/is-historical-data-dividend-adjusted but this seems to be unanswered. Please help: @sujith ,
  • rakeshr
    Is historical data adjusted to Dividends?
    Yes, historical data is adjusted to dividends. You can go through this thread.
  • QW5712
    @rakeshr , From the thread you mentioned, it's not clear whether the dividend prices are added to the adjusted stock price or subtracted? From the link I mentioned in the question: https://kite.trade/forum/discussion/4014/is-historical-data-dividend-adjusted It seems that they would be subtracted from the stock price automatically by the markets and adjustments are not required by Zerodha.

    But I think dividend should be added to the price so that we can have an idea of total returns of the stock.
  • rakeshr
    Dividend prices are added to the adjusted stock price or subtracted?
    It is adjusted as per the exchange circular. You can refer to a recent dividend circular here.
  • QW5712
    I am not talking about dividend adjustments on Option prices. I am interested in stock prices. Will dividend be subtracted from it?
  • rakeshr
    I am not talking about dividend adjustments on Option prices
    Computations remain the same. Dividend is always substracted.
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