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Digg it UP - Beta Factors: How They Can Be Used In The Current Situation
Life is full of challenges. We meet many confront in our daily life. When we are at the stage of entering school/college/university, we face many hard nut cracking challenges and learn many lessons of practical life through them. After acquiring graduation/post graduation, students usually move towards their specialization or adopt a profession of their choices, according to their own interest, keeping in view the market demand.Talents and Skills are the only tools, which could lead an individual towards the door of success in this challenging time. To qualify for a professional degree or a job, one should have strong past educational background along with integrated multi dimensional skills. It’s of no use acquiring higher degree without building character, confidence, and ex
If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a gre
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The aim of this article is to explain one method of measuring the volatility namely beta factors and how investors can interpret this information. The article aims to state how investors can use beta factor analysis to their advantage when there are political uncertainties affecting markets. Though some stockbroker firms calculate the beta factors of certain stocks quoted in their respective stock exchanges, investors have little access to these figures. In more developed markets many stockbroker firms do have access to beta factors but it is only in recent years that investors have access to this information.
BETA FACTORS:
The beta of an investment is a relative measure of the systematic risk of an investment. In other words it measures the specific risk of the company's shares relative to the market as a whole. In general, the sign of the beta (+/-) indicates whether, on average, the investment's returns move with the market or in the opposite direction to the market. The scale or value of the beta indicates the relative volatility of the particular stock.
A beta of +0.25 for instance, would indicate that on average, the investment's returns move one quarter as much as the markets do in the same direction. If the market rose by 10%, the investment would be expected to rise by 2.5% but on the other hand if the market fell by 10% the investment would be expected to fall by only 2.5%. A beta of -0.1 would indicate that on average, the investment's returns move one tenth as much as the market's do, but in the opposite direction. If the market rose by 10%, the investment would be expected to fall by 1%. Hence we can summarise a number of situations:
If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a grea
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The aim of this article is to explain one method of measuring the volatility namely beta factors and how investors can interpret this information. The article aims to state how investors can use beta factor analysis to their advantage when there are political uncertainties affecting markets. Though some stockbroker firms calculate the beta factors of certain stocks quoted in their respective stock exchanges, investors have little access to these figures. In more developed markets many stockbroker firms do have access to beta factors but it is only in recent years that investors have access to this information.
BETA FACTORS:
The beta of an investment is a relative measure of the systematic risk of an investment. In other words it measures the specific risk of the company's shares relative to the market as a whole. In general, the sign of the beta (+/-) indicates whether, on average, the investment's returns move with the market or in the opposite direction to the market. The scale or value of the beta indicates the relative volatility of the particular stock.
A beta of +0.25 for instance, would indicate that on average, the investment's returns move one quarter as much as the markets do in the same direction. If the market rose by 10%, the investment would be expected to rise by 2.5% but on the other hand if the market fell by 10% the investment would be expected to fall by only 2.5%. A beta of -0.1 would indicate that on average, the investment's returns move one tenth as much as the market's do, but in the opposite direction. If the market rose by 10%, the investment would be expected to fall by 1%. Hence we can summarise a number of situations:
If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a gre
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BETA FACTORS:
The beta of an investment is a relative measure of the systematic risk of an investment. In other words it measures the specific risk of the company's shares relative to the market as a whole. In general, the sign of the beta (+/-) indicates whether, on average, the investment's returns move with the market or in the opposite direction to the market. The scale or value of the beta indicates the relative volatility of the particular stock.
A beta of +0.25 for instance, would indicate that on average, the investment's returns move one quarter as much as the markets do in the same direction. If the market rose by 10%, the investment would be expected to rise by 2.5% but on the other hand if the market fell by 10% the investment would be expected to fall by only 2.5%. A beta of -0.1 would indicate that on average, the investment's returns move one tenth as much as the market's do, but in the opposite direction. If the market rose by 10%, the investment would be expected to fall by 1%. Hence we can summarise a number of situations:
If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a gre
Your Website may be the slickest, most jaw-dropping beautiful creation known to man but its nothing if it isn't showing on the first page of google search results for your chosen speciality subject. Our starters for ten...Keywords An obvious first choice but still probably the most important element of a websites content. To the uninitiated a website isn't categorised by its graphical content but its words. It's therefore vitally important to make sure your website not only looks good visually but has enough content stuffed away in the outer margins to keep the search engines happy. An important point to make here is to not stuff too many keywords in arbitrarily as Google being the swine that he or she is will soon be pulling your pants down for that schoolboy trick.Qu
A beta of +0.25 for instance, would indicate that on average, the investment's returns move one quarter as much as the markets do in the same direction. If the market rose by 10%, the investment would be expected to rise by 2.5% but on the other hand if the market fell by 10% the investment would be expected to fall by only 2.5%. A beta of -0.1 would indicate that on average, the investment's returns move one tenth as much as the market's do, but in the opposite direction. If the market rose by 10%, the investment would be expected to fall by 1%. Hence we can summarise a number of situations:
If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a gre
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If Beta > 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, but to a greater extent.
If Beta = 1 this means that the investment's returns will move, on average, in the same direction as the market's returns, and to the same extent.
If 0 -1, to the same extent if Beta = -1, and to a greater extent if Beta < -1. In practice it is rare to find negative beta stocks since they go against the trend of the market. One possible sector that could consist of negative beta stocks is the gold industry that tends to go against the trend shown by equity markets.
INVESTMENT STRATEGIES:
In world markets, beta factors can have a major influence on the investment strategies of investors. If the analysis is to be believed then in times of a bull market (rising markets) investors should hold stocks with a high positive beta factor since they should outperform the market. A practical example of this was in the late 1990’s concerning the dot com stocks. At this time the bull market has reached its peak and those investors who held dot com companies (that had high positive beta factors) made excess returns and did far better than the relative index performances.
However in times of bear markets (falling markets) then investors should target low beta stocks since they should outperform the market. An example of this can be found in the UK where two low beta FTSE stocks (Tesco and Centrica) outperformed the market in a falling market.
USING BETA FACTORS IN THE PRESENT SITUATION:
The current world political situation is probably the worst it is for many years. World markets are falling at a rapid pace. What does beta factor analysis teach us about an investment strategy in this situation? Firstly, however good a company is it likely that in such circumstances most will encounter falls in their share prices.
However during this time a number of alternative investments that have negative beta fa
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