<p>The DAX Stock Index, introduced in 1988, is a major stock market index representing 40 of the largest and most liquid German companies listed on the Frankfurt Stock Exchange. It is a key benchmark for the German economy and is widely followed by investors and financial institutions.</p>

<h2>How It Works</h2>
<p>The DAX is a capitalization-weighted index, meaning each component's weight in the index is proportional to its market capitalization. This ensures that larger companies have a greater influence on the index's performance. The index is reviewed quarterly, and components can be added or removed based on their market capitalization and liquidity.</p>
<p>The DAX is calculated in real-time during trading hours and is expressed in points. It is also available as a futures contract and an exchange-traded fund (ETF), providing investors with various ways to gain exposure to the German stock market.</p>

<h2>Why It Matters</h2>
<p>The DAX Stock Index matters for several reasons:</p>
<ul>
  <li><strong>German Economy Barometer:</strong> The DAX serves as a barometer for the German economy, reflecting the performance of its largest and most influential companies.</li>
  <li><strong>Investment Benchmark:</strong> It is a widely-used benchmark for investors, both domestic and international, to compare the performance of their portfolios against the broader German market.</li>
  <li><strong>European Market Indicator:</strong> As one of the largest and most liquid indices in Europe, the DAX often influences the performance of other European stock markets and indices.</li>
</ul>
<p>For example, during the 2008 financial crisis, the DAX lost more than 40% of its value, reflecting the broader economic downturn and serving as a stark indicator of the crisis's impact on the German economy.</p>