what is beta| beta information| beta meaning in easy language| beta in stock market

 what is beta| beta information| beta meaning in easy language| beta in stock market

what is beta

beta is a risk analysing tool that helps investors, traders for technical analysis. because when market is going bullish or up, bearish or down it doesn't mean that all stocks are in trend there is some stocks that are against of trend. so beta helps us to know that particular stock is with the trend or not.

             risk analysing picture

beta value 

suppose there is a stock its with beta 1.3 its mean it is 30% more volatile than the market. its main if market give returns it will give 30% more returns or if market gives losses it will give 30% more losses according to market.

beta example with market price

market price means in this situation index price so lets suppose index price is 1000$, stock price is 10$ and beta is 1.4 mean 40% more volatile. so, if market gives 10% returns i.e. 1100$ is index price we can expect stock will give 14% returns i.e. stock price is 14$. or, if market gives 100%  returns so according to 1.4 beta we can expect stock will give 140$. and it if market give loss it will give 40% more losses than market.

beta less than 1

beta less than 1s' is less volatile than the market. suppose beta is 0.7 so it is -70% volatile than the market. it will give less profit and losses than the market %.

Is high beta high risk and low beta low risk?

yes, high beta is high risk and low beta is low risk.

we hope, now you understand beta and by maths you can also find how much this stock will give returns and losses.