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Beta Stocks

Definition Beta Stocks

Beta of stocks measures the risk that the shares carry compared to the broader market. Theoretically, the market is said to have a default Beta of 1. As a result, Beta stocks can be of four types:

  • High Beta Stocks : typically having a Beta value of more than 1, these stocks are known to be high-risk, high-reward investments

  • Low Beta Stocks : typically having a Beta value of less than 1, these stocks are known to be low-risk, low-reward investments

  • Negative Beta Stocks : typically having a Beta value of less than zero, these stocks are known to have an inverse correlation with the market

  • Same as the market : typically having a Beta that’s equal to 1, these stocks are known to share characteristics with the market




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