Beta

Beta is a measure of a stock’s volatility relative to the overall market. It indicates how much a stock's price is expected to move in relation to market movements. A beta of 1 means the stock’s price will likely move with the market, a beta greater than 1 indicates higher volatility than the market, and a beta less than 1 suggests lower volatility. Investors use beta to assess the risk associated with a stock. A high beta stock may offer greater returns but comes with higher risk, while a low beta stock is considered more stable but may offer lower returns.

Example

A stock with a beta of 1.5 is expected to be 50% more volatile than the market. If the market rises by 10%, this stock might rise by 15%, but if the market falls by 10%, the stock might drop by 15%.