What does fundamental analysis primarily focus on?

Fundamental analysis primarily focuses on determining the intrinsic value of a company by assessing its financial performance. This involves examining various financial statements, such as the income statement, balance sheet, and cash flow statement. Analysts evaluate key metrics, including revenue, earnings, assets, and liabilities, to understand the company's financial health and potential for future growth.

The intention of this analysis is to identify undervalued or overvalued stocks by comparing the calculated intrinsic value to the current market price. This approach allows investors to make informed decisions based on the underlying economic realities of the business rather than short-term price movements or market trends.

In contrast, the other choices are centered on aspects that do not align with the core principles of fundamental analysis. Technical indicators relate to price trends and movements, market sentiment reflects investor psychology, and volatility focuses on the fluctuations in market prices. These areas are more relevant to technical analysis and market psychology rather than the comprehensive evaluation of a company's financial situation, which is the focus of fundamental analysis.