25/01/2013
www.facebook.com/sfsltd
Beta of a stock=
If :
1.) β < 0 Asset generally moves in the opposite direction as compared to the index example-: Gold, which often moves opposite to the movements of the stock market
2). β = 0 Movement of the asset is uncorrelated with the movement of the benchmark Example -: Fixed-yield asset, whose growth is unrelated to the movement of the stock market
3.) 0 < β < 1 Movement of the asset is generally in the same direction as, but less than the movement of the benchmark Stable, Example -:"staple" stock such as a company that makes soap. Moves in the same direction as the market at large, but less susceptible to day-to-day fluctuation.
4.) β = 1 Movement of the asset is generally in the same direction as, and about the same amount as the movement of the benchmark Example -:A representative stock, or a stock that is a strong contributor to the index itself.
5.) β > 1 Movement of the asset is generally in the same direction as, but more than the movement of the benchmark
example -:Volatile stock, such as a tech stock, or stocks which are very strongly influenced by day-to-day market news.
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