Beta measures the fluctuation degree of the risk of a single asset relative to the risk of the whole market, and it measures the systemic risk. Beta value is a relative index, which is often used in the analysis of stocks or funds, and can reflect the sensitivity of a stock or fund to changes in the whole market. The greater the absolute value of beta, the greater the risk of stocks or funds, and vice versa.

Use of β value

1. Investors can use beta to calculate the cost of capital, evaluate assets, make investment decisions or formulate performance appraisal standards;

2. Investors can use the beta value to judge the systemic risk of a single asset or portfolio and manage the investment of financial derivatives such as futures stock indexes.

3. Beta value can reflect the sensitivity of stocks to market changes in the securities market. Investors can choose stocks with different beta values according to different market conditions. The bull market chooses stocks with high beta values to get more returns, while the bear market chooses stocks with low beta values to resist market risks.