You'll need a spreadsheet like Excel. Do the following.
1) Get percentage daily returns for the stock between two dates (I suggest every day for a year). You can get this historical data from Yahoo Finance
2) Pick a benchmark index
3) Get percentage daily returns for the index between the two dates as well
4) Calculate the covariance of the stock with respect to the index and divide by the variance of the stock [the two excel functions you'll need are covariance.p() and variance.p() ]
Go to the related link below for a spreadsheet to do this.
Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.
If market rises by 100% then the stock rises by 120%
49%....in reality no stock has a beta of 7
beta is a useless metric. It measures volalotilty. Which a serious investor won’t care about because it just gives them the price to buy more at a cheaper price and a investor knows the instricic value of a stock.
Check out these websites: http://faculty.babson.edu/academic/Beta/CalculateBeta.htm http://www.money-zine.com/Investing/Stocks/Stock-Beta-and-Volatility/
Beta measures a stock's volatility (the swings up and down in price). The market as a whole has a beta of 1.0, but each stock is determined a beta value from a history of it's stock movements. Riskiness equates to the stock losing value and high beta stocks are more prone to falling faster.
the beta coefficient, b of a relatively safe stock
The Beta of a stock is always dynamic.
In the context of the Capital Asset Pricing Model how would you define beta? How are beta determined and where can they be obtained? What are the limitations of beta?
The beta of a firm's stock is dependent on the volatility of the stock relative to the overall market. So if the stock's volatility increased relative to the overall market, it's beta would increase as well.
A beta of 1 indicates that the security's price will move with the market.
Look up Bombay Stock Exchange www.bseindia.com and Nantional Stock Exchange www.nseindia.com for beta values of Indian companies.
If market rises by 100% then the stock rises by 120%
they are determined by the board of directors
Beta is a measure of a stock's volatility. The price of a stock with a beta of 1.0 rises and falls on average with the overall market. A beta greater than 1.0 could mean larger prices fluctuations, and a beta of less than 1.0 indicates a more tame stock. For example, if Company A has a beta of 1.2 and the market goes up 10% in a given period of time then Company A should increase about 12% in value. If the market falls 20% then Company A's stock price should drop 24%.
49%....in reality no stock has a beta of 7
beta is a useless metric. It measures volalotilty. Which a serious investor won’t care about because it just gives them the price to buy more at a cheaper price and a investor knows the instricic value of a stock.