Investors will consider the possible risks of stocks when selecting stocks. What common indicators can be used to measure the risks of stocks? How should investors deal with stock risks? Regarding these, this article will use relevant knowledge to make some discussions for your reference.

What common indicators can be used to measure stock risk?

Investors can roughly estimate the risk of a stock through its volatility, price-to-earnings ratio, company financial indicators, etc.

Volatility is a measure of stock price changes. A high volatility means that the stock price is unstable and the potential risk is high. Investors can make a judgment by looking at the stock's historical volatility data.

The price-to-earnings ratio is an indicator used to evaluate stock valuation. It is calculated by comparing the price per share to the earnings per share. Through the valuation, investors can know which stocks are undervalued by the market and which ones are undervalued. Overvalued. In addition to the fact that the company is indeed worthy of the market's investment, overvalued stocks can basically be considered to contain higher investment risks.

The company's financial indicators reflect the company's current financial status and the risks it faces. By studying the company's financial indicators, investors can roughly judge the difficulties faced by the company or its development prospects, and make inferences based on this. Potential risks of a company issuing shares.

In addition, investors can also judge stock risk through the ratio of stock volatility to market volatility, that is, whether the Beta coefficient is greater than 1, or by using the ratio of stock price to cash flow per share. A company's solvency and, indirectly, the riskiness of its issued shares.

How to deal with stock risks?

In addition to basic operations such as formulating an investment plan and selecting suitable stocks, investors can also deal with stock risks through some investment operations.

For example, diversify investments in stocks of different industry sectors to allocate stock risks; or buy stocks and short-sell ETF index funds with this as the underlying target to hedge risks. This is used to improve the security of investors' funds for stock purchases.