how to interpret the beta value again ASPI or S&P 20?

pjrngroup · 1 how to interpret the beta value again ASPI or S&P 20? Fri Oct 23, 2015 7:52 pm

pjrngroup

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Could anyone explain, thanks.

EquityChamp

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pjrngroup wrote:Could anyone explain, thanks.

Beta measures the sensitivity of a share relative to market movement. That is what degree a share will move when the market moves. We take beta value for market as 1 because market represent all the stocks. when an individual stocks beta is say 1.2 we call it as aggressive and if it is say 0.8 we call it as laid back.

Lets take an example. Assume stock A has a beta value of 1.3. This means when the market moves up by 10% this stock A can move up by 30% higher than the market growth since it is an aggressive stock. Same thing applies for the down trend as well.

Beta can be positive or negatie. If negative means the stock's price movement is against the market movement. That is when the market is up this particular share is down. Good example is higher dividend paying companies. Reason is that when the overall market is going down people will be more looking for dividend income than capital gain so that they demand for higher dividend paying companies which make those shares to move up when the market is going down.

Thanks

nimantha80

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reacently beta was nagative for chicken shares.

pjrngroup

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EquityChamp wrote:

pjrngroup wrote:Could anyone explain, thanks.

Beta measures the sensitivity of a share relative to market movement. That is what degree a share will move when the market moves. We take beta value for market as 1 because market represent all the stocks. when an individual stocks beta is say 1.2 we call it as aggressive and if it is say 0.8 we call it as laid back.

Lets take an example. Assume stock A has a beta value of 1.3. This means when the market moves up by 10% this stock A can move up by 30% higher than the market growth since it is an aggressive stock. Same thing applies for the down trend as well.

Beta can be positive or negatie. If negative means the stock's price movement is against the market movement. That is when the market is up this particular share is down. Good example is higher dividend paying companies. Reason is that when the overall market is going down people will be more looking for dividend income than capital gain so that they demand for higher dividend paying companies which make those shares to move up when the market is going down.

Thanks

Excellent EC. I have cleared my doubt. thank you very much for sharing your knowledge and time.

EquityChamp

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nimantha80 wrote:reacently beta was nagative for chicken shares.

It should be the case brother as you will see for last three months ASPI is down but chicken shares up >100%. You can see this for most of the illiquid stocks as well from another month or two.

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how to interpret the beta value again ASPI or S&P 20?

1 how to interpret the beta value again ASPI or S&P 20? Fri Oct 23, 2015 7:52 pm

pjrngroup

2 Re: how to interpret the beta value again ASPI or S&P 20? Sat Oct 24, 2015 12:11 am

EquityChamp

3 Re: how to interpret the beta value again ASPI or S&P 20? Sat Oct 24, 2015 6:12 am

nimantha80

4 Re: how to interpret the beta value again ASPI or S&P 20? Sat Oct 24, 2015 6:29 am

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5 Re: how to interpret the beta value again ASPI or S&P 20? Sun Oct 25, 2015 6:00 am

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6 Re: how to interpret the beta value again ASPI or S&P 20?

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