Is It Time To Play Beta?

Pros and Cons of Beta

A stock’s beta is one easily available parameter which can be helpful as a gauge of a stock’s volatility relative to the broader market or a particular portfolio. Armaan Madhani delves deeper to obtain a better understanding of beta, its merits, demerits and sheds light on how to analyse the market risk associated with a particular stock along with its effect on the generation of respective returns 

Before investing in a stock, investors study several parameters such as valuation, EPS, ROE, ROCE, dividend history, growth levers, leverage, shareholding pattern, and much more. These parameters no doubt help filter the best opportunities available at a given point of time. However, there are some other important tools that can be utilised along with the above-mentioned parameters to enhance returns. A stock’s beta is one such easily available parameter which can be helpful as a gauge of a stock’s volatility relative to the broader market or a particular portfolio.