Measure a stock's volatility relative to the market to assess investment risk.
Enter historical returns to calculate a stock's beta coefficient, which measures its volatility relative to the overall market.
Beta Formula
β = Cov(Rstock, Rmarket) / Var(Rmarket)
Where Cov is covariance and Var is variance
Beta measures a stock's volatility in relation to the overall market. Here's how to interpret beta values and use them in your investment decisions.
Less volatile than the market. Tends to be less affected by market swings.
Moves in line with the market. Expected to match market performance.
More volatile than the market. Tends to amplify market movements.
Collect periodic returns (daily, weekly, monthly) for both the stock and a market index (like the Ghana Stock Exchange Composite Index) for the same time periods.
Input the returns as percentages, separated by commas. Ensure the stock and market returns are in chronological order and correspond to the same time periods.
Click "Calculate Beta" to compute the stock's beta coefficient. The result will show the beta value along with an interpretation of what it means for your investment.
Use beta to assess the stock's risk profile. Higher beta stocks may offer higher returns but come with greater risk, especially in volatile markets.