Beta factor
might be a good measure of market risk, according to the assessment of opportunities and risks of the investment alternative is called beta factor expressed gift. simpler to compare with the volatility ratio of variation of a certain base value with the corresponding index.
In a theoretical factor beta 1 will be the volatility of the underlying index and share the same opportunities and risks which is also identical. Based instruments with higher beta values are disproportionate part in the development of the overall market, according to higher chances and risks of investment. Exactly the opposite is the case concerns the low beta, here the majority reacts slower than the overall market, the profit-loss margin squeeze will be lower. Mathematical derivation is that the volatility ratio is relatively complex and therefore should be mentioned. High practical importance is the beta factor, especially about the risk weight of market-driven investment strategies based phase portfolio.
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Friday, July 29, 2011
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