Question

How do I calculate the up-market Beta? Can you give me an example please? Can you give an examp;le of when it is was a good market timer and when it is a bad market timer

Answer 1

Answer:-

Beta describe the relation of returns between the stock and the market. Beta shows whether the stock grows faster or slower than the market.

For example- If BETA equals 1.2, this means that when market goes up by 1%, the stock grows by 1.2%.

Upside Beta

Is the stock beta measured for periods when the benchmark return is positive. This will allow an investor to understand which stock have historically generated the highest returns during market upwings. Here, the variance is defined as the variance for periods such that the market return is greater than zero.

Example:- if beta is 1.3 and the market is expected to move up by 10% then the stock should move up by 13%.A positive beta value indicates that stocks generally move in the same direction with that of the market and the vice versa.

In case of good timer market investor will go for the high beta if gets a bullish, i.e. positive signal and for the low beta if gets a bearish direction i.e negative signal which is also known as bad market timer.