Frame BETA Beta is a risk measure comparing the volatility of a stock's price movement to the general market. Beta's companion measure for volatility is alpha. Monthly data is preferred.
Beta provides a good idea of a stock's inherent risk or sensitivity to general market fluctuations.
Signals High beta stocks react strongly to variations in the market, and low beta stocks are less affected by market variations. If Beta is 1, then an issue has the same volatility as the general market. It is either growing at the same rate or declining at the same rate. If Beta is greater than 1, then an issue is more volatile . If Beta is less than 1, then an issue is less volatile .