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Finance GlossaryStandard Deviation
Standard Deviation
Definition of Standard Deviation
Standard deviation is a metric that shows the extent to which the returns on investment of a stock fluctuate around its average. When the standard deviation is higher, it indicates higher risk and volatility. On the contrary, a lower standard deviation indicates that the returns are more stable. Investors use this metric to understand the predictability of an asset and compare risk levels between investments or portfolios.
Related Terms
At The Close Or Closing Price
At the close or closing price is the last traded price of securities like stocks, ETFs, and others at the end of regular market hours.
For example, if a stock hit Rs. 4,500 at 3.30 PM (market close), then that is its price at the close also known as the closing price.
Unlike Adjusted Closing Price, at the close or closing price does not take into account price changes due to corporate actions.
For example, if a stock hit Rs. 4,500 at 3.30 PM (market close), then that is its price at the close also known as the closing price.
Unlike Adjusted Closing Price, at the close or closing price does not take into account price changes due to corporate actions.
Bounce Trading
Bounce trading refers to buying a position in security when its price falls to a particular support level with the anticipation that it will “bounce” back to a certain price level. Technical analysis is the bedrock of bounce trading but various patterns and strategies can be used to achieve the desired goal.
Mean Absolute Deviation
Mean Absolute Deviation (MAD) is a statistical measure that shows how much the values in a data set differ from the average. It is calculated by taking the average of the absolute differences between each value and the mean.
Commodity Exchange
A commodity exchange is a marketplace where commodities and related derivative contracts are standardized and traded. The commodity exchange can be split into these sub-markets:
- Derivatives market: this is where commodity exchanges allow futures, options, forwards, and other derivatives to be traded
-
Spot market: this is where commodity exchanges allow buying and selling of commodities in real-time (on the spot), including cash contracts
In India, there are 4 commodity exchanges that are popular and widely turned to:
- Indian Commodity Exchange (ICEX)
- Multi Commodity Exchange of India (MCX)
- National Commodity & Derivatives Exchange Limited (NCDEX)
-
National Multi Commodity Exchange of India (NMCX)
Within these exchanges, the most commonly traded commodities include:
- Crude oil
- Coffee
- Corn
- Cotton
- Gold
- Natural gas
- Silver
- Sugar
- Wheat
Discount Brokers
Discount brokers are platforms that offer essential stock trading and investment services rather than a full stack of services that may or may not be useful for everyone.
Discount brokers are discount brokers because their service is priced competitively, meaning the cost of trading and investing may be significantly low than a fullservice broker.
Discount brokers are discount brokers because their service is priced competitively, meaning the cost of trading and investing may be significantly low than a fullservice broker.
Deferred Tax
The term deferred tax in a financial statement is used to refer to future tax payments in the case of temporary differences, a situation where an asset or liability on the balance sheet is realised but is taxable in the future.
Common examples of deferred tax include line items such as employee bonus or PF contributions, depreciation of fixed assets, net losses, and others.
Common examples of deferred tax include line items such as employee bonus or PF contributions, depreciation of fixed assets, net losses, and others.
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