# Herfindahl Constituent Concentration

`D04-F05-A02` · Market Breadth and Internals → Concentration and Diffusion · archetype `record-transform` · difficulty 2/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/market-breadth-and-internals/concentration-and-diffusion/herfindahl-constituent-concentration/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { calculate } from "fintech-algorithms/market-breadth-and-internals/concentration-and-diffusion/herfindahl-constituent-concentration";
```

## Signature

```ts
calculate(rows)
```

The Herfindahl–Hirschman index of constituent weights: the sum of squared weights. Squaring is what makes it a concentration measure — it is dominated by the largest holdings in a way a simple count never is.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `rows` | `Row[]` | yes | Constituents with weights. Rows carry a `ready` flag; a row that is not ready is excluded rather than treated as zero, because a missing count and a count of zero mean opposite things about market breadth. |

## Returns

`{ status, hhi, hhi_points }`

HHI as a fraction and in the conventional points form, which differ by a factor of 10,000 and are frequently confused.

## Errors

- When weights do not sum to approximately 1 — reported as a status rather than thrown

## Complexity

Time `O(n)`, space `O(1)`.

## Worked example

Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

### Input

`rows`:

```json
[
  {
    "security_id": "S01",
    "weight": 0.17821782178217824,
    "return": 0.065,
    "sector": "Tech",
    "ready": true
  },
  {
    "security_id": "S02",
    "weight": 0.13861386138613863,
    "return": 0.041,
    "sector": "Financials",
    "ready": true
  },
  {
    "security_id": "S03",
    "weight": 0.10891089108910892,
    "return": 0.028,
    "sector": "Industrials",
    "ready": true
  }
]
```

Showing 3 of 24 elements.

### Call

```ts
calculate(rows)
```

### Returns

object with 3 fields: status, hhi, hhi_points

```json
{
  "status": "resolved",
  "hhi": 0.0898088422703657,
  "hhi_points": 898.088422703657
}
```

## Verification and provenance

Tier: **verified** (via row-fixture).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.1.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/market-breadth-and-internals/concentration-and-diffusion/herfindahl-constituent-concentration/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/market-breadth-and-internals/concentration-and-diffusion/herfindahl-constituent-concentration/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/market-breadth-and-internals/llms.txt