The Beginner's Guide to Beta

beta in investing explained

Beta is a measure of a stock's volatility in relation to the overall market.
By calculating beta, you can measure the stock's volatility with respect to the broader market or index.

If a stock "PQR" has a beta of 2.5, it indicates that for every 1 point change in the market or index, stock "PQR" moves 2.5 points and vice versa.

Stocks with a high beta have a higher risk but a higher return, whereas low beta stocks have a lower risk but a lower return.

A beta of 1 indicates that the security's price tends to move with the market.

A beta greater than 1 indicates that the security's price tends to be more volatile than the market.

A beta of less than 1 means it tends to be less volatile than the market.

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