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Stock Beta Explained

Objective of investing in stock is to get maximum returns. As we understand that investment in stocks is always subjected to risk and depending on risk appetite of the investor/trader they invest in stock of various risk/return profile.

This gives investors a need of a indicator which tells about risk, in terms of volatility, involved with the stock when compared to other stocks and broader market. One such indicator is Beta

Definition of Beta
Beta is measure of volatility/risk when compared with broad market. The higher the beta, the better the expected stock returns/risk. In other words Beta is indicator of market risk.

Beta Values and their Interpretation
Beta Value 1: Beta value of 1 indicates that stock returns are in line with the market. That means when market goes up stock goes up and vice versa. This should not be confused with that stock with beta of one is no risk stock as market itself is risky.

Beta between 0 & 1: Stocks with beta less than one are less volatile stock and considered less risky stocks. They are less affected with wild market swings. But at the same time returns are also lower than market returns. These stocks should be owned by low risk takers. Defensive stocks or non-cyclical stocks belong to this category.

examples of option trading with various scenario

Beta Greater than 1: Stocks with beta higher than one are high risk and high return stocks. Their return is higher than market return during uptrend. These stocks are delight of aggressive traders. Technology stocks belong to this category.
Beta less than 0 (Negative Beta): These are stocks which tends to go down even in advancing market. They are also called decaying stocks.
Beta equal to 0: This means that financial asset is unrelated to stock market. For example Cash value stays as is irrespective to the market movement.

Some Vital Information on Beta

Beta in TopStockResearch.com: Knowing importance of beta for making important trading decision we have included beta values of stocks. Apart from single beta calculation we have decided to calculate beta for various frequency like daily/weekly & monthly for various periods. We have also included standard deviation so as to find stocks absolute volatility.

Beta values for Indian stocks are computed with S&P CNX Nifty as base and are calculated for every stock and placed at 'Price range Summary section of each stock research.

Unlike lot of of beta providers, we do dynamic period calculation. What this means is that for a monthly calculation we do not start from 1st to last date of the month. We start from that day of the month and traverse backward

For example for 15th Dec for monthly frequency, our monthly intervals would be 16-Nov to 15th Dec, 16th Oct to 15th Nov .......

Beta Values For Various Periods: To cater to wide variety of our visitors we have calculated beta values for following periods:

Daily - One Month Range Weekly - One Year Range Monthly - Two Year Range Fortnightly - Two Year Range
Daily - Three Month Range Weekly - Two Year Range Monthly - Four Year Range

Apart from beta values we include standard deviation and stock mean. Our website provides also provides free Stock screening on Technical Indicators. It can be found at below link:

Related Technical Stock Screener

Beta StocksHigh Beta Short TermHigh Beta Medium TermHigh Beta Long Term
Low Beta Short TermLow Beta Medium TermLow Beta Long Term 
Beta StocksHigh Beta Short TermHigh Beta Medium TermHigh Beta Long Term
Low Beta Short TermLow Beta Medium TermLow Beta Long Term 

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Total Comments 5

User Comments
Posted by Guest
Posted on: 25-Jun-2017
Good tech info

Posted by Guest
Posted on: 22-Sep-2015
A very good sight with technical details in simple understandable manner. Can introduce more indicators like TSI and fundamental details like moneyworks4me.com.

Appricate the hard work behind your website. BG.Gopal Technical Analyst

Posted by BAKUL
Posted on: 27-Aug-2014
for low beta stock-snap shot not appearing...what is the reason..? how to find low beta stock ??..
On screen appears as below for you reference....

Not Found
The requested URL /BetaStocks/LowBetaStocksShortTerm.html was not found on this server.
Apache/2.2.15 (CentOS) Server at www.topstockresearch.com Port 80
 BAKUL J SOLANKI

Posted by Admin
Posted on: 26-Aug-2014
Hi Bakul, Thanks for the update. You can follow the link to track High Beta Stocks
. You can get the screening on High Beta Stocks for short/medium/long term.
 Thanks
Site Admin

Posted by BAKUL
Posted on: 26-Aug-2014
No stock appears on screen for high beta stock..?
How to find high beta stocks..?
 BAKUL J SOLANKI


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