In the contemporary financial field, the most common meaning of alpha is excess return. Let's take a look at the calculation formula of alpha coefficient: alpha coefficient = actual return on investment-market risk-free interest rate-beta coefficient x market return. For example, if the actual rate of return of a fund investing in CSI 300 in 20 16 years is 9%, its alpha coefficient = 9%- 1.5%- 1x5.6%. The market risk-free interest rate is based on the one-year time deposit rate in China. The default beta is 1, and 5.6% is the increase of Shanghai and Shenzhen 300 in 20 15 years. If alpha is greater than 0, the fund is OK; if alpha is less than 0, it is better to buy this fund than to deposit it in the bank. In fact, if the stock market falls in a mess, Alpha will be high in time and the yield will be negative. But it doesn't mean that this fund is not good. The higher the alpha, the more suitable the fund is for investment compared with bank deposits.

The α coefficient (α) is the difference between the actual return of the fund and the expected return calculated according to the β coefficient. Its calculation method is as follows: the excess return is the income of the fund MINUS the income of risk-free investment (in China, it is the income of 1 year bank time deposit); Expected return is the product of beta coefficient β and market return, which reflects the income of the fund due to the overall changes in the market; The difference between the excess return and the expected return is the α coefficient. Beta coefficient is a relative index to measure the overall volatility of fund returns relative to performance evaluation benchmark returns. The higher the beta, the greater the fluctuation of the fund relative to the performance evaluation benchmark. If β is greater than 1, the volatility of the fund is greater than that of the performance evaluation benchmark. Or conversely, when Dallas goes to the audience, if β is 1, the market will rise 10%, and the fund will rise10%; The market fell 10%, and the fund fell accordingly 10%. If β is 1. 1 and the market rises 10%, the fund rises11%; When the market falls 10%, the fund falls 1 1%. If β is 0.9 and the market rises by 10%, the fund will rise by 9%; When the market fell 10%, the fund fell by 9%.

Beta coefficient is a risk coefficient. If the beta coefficient is 1, it means that its risk is as big as the market. If its beta coefficient is greater than 1, it means that its fluctuation is greater than the market and the risk is greater. If its beta coefficient is lower than 1, it shows that its fluctuation is smaller than that of the market and its ability to resist risks is stronger. The alpha coefficient is simply to get more than the market income, which means that a fund manager should have alpha income. If alpha is less than 0, it means that the investment income of this fund manager is still lower than the market income, that is, there is no alpha and it is unqualified.