What is a Beta Value
A beta value is used to check for the volatality of a fund with that of market. It is a statistical measure that shows how the fund will move in relation to the market.
If the beta value is 1, then the stock will move up or down with the Sensex. If the beta value is less than 1, then the upward movement of the fund will be less compared to the Sensex, same time the downward movement of the fund will also be less compared to the Sensex. Similarly, if the beta value is more than 1, then the upward movement of the fund will be more compared to the Sensex, same time the downward movement of the fund will also be more compared to the Sensex.
Example:
If a particular stock has a beta value of 0.8, then when the Sensex gain 10%, this stock will gain only 8%, and when the Sensex lose 10%, this stock will lose 8%.
If a particular stock has a beta value of 1.5, then when the Sensex gain 10%, this stock will gain 15%, and when the Sensex lose 10%, this stock will lose 15%.
There may be other factors which makes the fund movement less volatile though its beta value is more than one or vice versa.
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