Within the stock markets, risk and reward harmonise as an inseparable dynamic duo. They are always connected and work together, just like a lock and key. You need both for a complete picture. Risk is a vast concept and within it, we find two main categories: systematic risk and unsystematic risk. Systematic risk, also called market risk, is inherent to the overall market or a specific market segment. It cannot be diversified away and impacts all investments to some degree. Economic conditions, interest rates, and geopolitical events contribute to systematic risk.
In contrast, unsystematic risk is specific to a particular company or industry. Diversification or spreading investments across various assets can mitigate unsystematic risk. Examples include company-specific issues, management changes, or industry-specific challenges. By diversifying a portfolio, investors can reduce unsystematic risk, leaving mainly systematic risk, which is beyond their control.
What is Beta?
Beta is a key component of systematic risk, representing a stock’s sensitivity to overall market changes. Essentially, it gauges how a stock might respond to shifts in the broader market. A beta less than 1 implies lower volatility compared to the market, while a beta equal to 1 signifies the stock moves in tandem with the market. On the other hand, a beta exceeding 1 indicates higher volatility, suggesting the stock is more unpredictable.
BAB Strategy
Denne historien er fra January 29, 2024-utgaven av Dalal Street Investment Journal.
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Denne historien er fra January 29, 2024-utgaven av Dalal Street Investment Journal.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
