BETA OF A STOCK OR SECURITIES
Beta is a volatility of stock with respect to market. It is a statistical value which defines change in value of stock with respect to market i.e if a stock has a beta of 1 then it means if stock market rises with 1 then stock would also moves by 1, If stock moves in reverse direction then it would have negative beta.
Stocks having higher bete would be at higher risk(more than 1 or less than -1 ) and vice versa for stocks having beta between (-1 to 1)
How to use beta in practical life :-
First problem come before us is how to compute beta(we would be learning later in posts) so how can we use beta.
STEPS
1. Open money control and scroll down & open stock screener.
In search indicator type BETA.
Here I am sharing BETA screen I have created
Now suppose if there is a fundamental news or indicator that today 's the market is going to fall then we can take following steps
1. Nifty is in RED and also sectors nifty is in RED as it is on 06-12-19 then we should take short in intra day.
Lets have a look at stocks having positive beta near to 1 for example
HDFC BANK
HDFC BANK have beta as 1.05. Now have a look at HDFC 1 DAY chart
It has high price of 1256 & low price at end of 1243 so we can take short position at beginning of the day, so we can take short position in 1 beginning & take long position in the end of the day.
WE can earn a handsome amount of Rs.13 per share.
I will be updating with more stock news.
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