Re: Tell me about stock volitility and price movement
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beta is the degree to which the given stock has moved in the past vs. the mkt (typically the S&P500). so a high beta signifies that the stock is "riskier" or moves more than the market, and a low beta signifies the reverse.
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Barron,
What would beta be for a hugely volatile stock whose returns were orthogonal to the market's return?
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If they were exactly orthogonal, beta would be 0. This is the problem with beta, it measures correlation to market movements. If it moves 2x for every 1x market movement, then beta would be 2. But it would have to correlate with the market well. It could still be very swingy and just not correlate with the market and then have a low beta. That would give you the false assumption it wasnt volatile.
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yea, plus i don't analyze stocks... or anything in that sense. asking what is orthagonal just isn't the qusetion i go with.
more like top down and seeing what jumps out at me as possible areas for further analysis and transformation into a trade idea and eventually a trade.
Barron
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