Friday, February 27, 2009

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.
Share this to a friend

Related Posts :



0 comments:

About Me

India
I am a Software Engineer based in Chennai, India. My hobbies are blogging, driving. You can contact me here, http://sameerbloggs.blogspot.com/2009/03/contact-me.html

Contact Me

Disclaimer

Disclaimer: All the information given in this blog is only my ideas and knowledge what I got from internet or other sources. For any interest rate, charges etc check the particular service as the charge might have changed. Regarding the intraday trading tips, this is applicable for that day only and also shouldn't be taken as advice. All the actions taken by you is responsible by you only. Thanks.

Back to TOP