Beta

Beta is used by investors to assess the volatility of any stock, mutual or hedge fund, or portfolio relative to its market. It is a measure of the systemic risk of a security or portfolio. Systemic risk is the risk that is common to the whole economy, which cannot be diversified. It is also known as market risk and is denoted by β. Beta gives an indication of the performance of particular securities or portfolios against market return. For market return, benchmark index returns such as the ZSE All Share Index are considered. If securities beta is 1, it means the price of the security will move in the same direction as the index. If securities beta is more than 1, say 1.3, it means stock price is 30 percent more volatile than the index return.

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