Beta coefficient
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manveena
Beta coefficient measures the market systematic risk of shares.
When beta is one, the return on the share changes at the same rate as the average return on the market.
When the coefficient is two, the investment risk is greater and the return varies so that the average is double the return on the market.
If beta is under one, the share has a lower risk and changes on the market have on average a smaller impact on the return.
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Actuarial Info mobile appshreyanshh
Manveena wrote:Beta coefficient measures the market systematic risk of shares.
When beta is one, the return on the share changes at the same rate as the average return on the market.
When the coefficient is two, the investment risk is greater and the return varies so that the average is double the return on the market.
If beta is under one, the share has a lower risk and changes on the market have on average a smaller impact on the return.
Sent from my Redmi Note 3 using
Actuarial Info mobile appSo basically the more the beta, the more volatile the share price is?
Sent from my S6s using
Actuarial Info mobile appjapjots254
Manveena wrote:Beta coefficient measures the market systematic risk of shares.
When beta is one, the return on the share changes at the same rate as the average return on the market.
When the coefficient is two, the investment risk is greater and the return varies so that the average is double the return on the market.
If beta is under one, the share has a lower risk and changes on the market have on average a smaller impact on the return.
Sent from my Redmi Note 3 using
Actuarial Info mobile app
Since beta can be calculated for individual stocks, what if I want to calculate of the portfolio? Can I do this and if I am able to do this, what would be the relevance of this?Sent from my iPhone using Tapatalk
japjots254 wrote:Manveena wrote:Beta coefficient measures the market systematic risk of shares.
When beta is one, the return on the share changes at the same rate as the average return on the market.
When the coefficient is two, the investment risk is greater and the return varies so that the average is double the return on the market.
If beta is under one, the share has a lower risk and changes on the market have on average a smaller impact on the return.
Sent from my Redmi Note 3 using
Actuarial Info mobile app
Since beta can be calculated for individual stocks, what if I want to calculate of the portfolio? Can I do this and if I am able to do this, what would be the relevance of this?Sent from my iPhone using Tapatalk
Portfolio beta can be calculated as a weighted average of all the individual beta where the weights are the portfolio capital share of each stock.
Coming to the relevance, beta portfolio would tell you how risky investment in that portfolio would be.
Do let me know if I’m wrong!
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Actuarial Info mobile appshreyanshh wrote:Manveena wrote:Beta coefficient measures the market systematic risk of shares.
When beta is one, the return on the share changes at the same rate as the average return on the market.
When the coefficient is two, the investment risk is greater and the return varies so that the average is double the return on the market.
If beta is under one, the share has a lower risk and changes on the market have on average a smaller impact on the return.
Sent from my Redmi Note 3 using
Actuarial Info mobile appSo basically the more the beta, the more volatile the share price is?
Sent from my S6s using
Actuarial Info mobile appI don’t think it comments about the share price. I guess, beta talks about the returns only.
Do let me know if I’m wrong!
Sent from my Redmi Note 3 using
Actuarial Info mobile app
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