Top Low Beta Stocks of 2023
We often have unanswered questions regarding how investors evaluate the risk characteristics of market equities. 'Beta' is one of the most popular stock gauges, yet it is also one of the most difficult concepts to comprehend. Beta is a measure of a stock's volatility in proportion to movements in the general market, to put it another way.
The cost of equity is determined by the capital asset pricing model (CAPM), which heavily depends on beta. High-beta stocks are those with a market value above 1.0, whereas low-beta stocks are those with a market value below 1.0.
In every market in the globe, the beta is 1.0. Given the recent volatility in the stock market, investors must find a method to keep some exposure to stocks.
Low-beta stock investing is currently a very common trend among many investors. The main requirement for creating a low-risk portfolio is a beta range of 0 to 0.6.
Why Should you invest in Low Beta Stocks?
The low-beta strategy may both beat the overall market and aid in securing your portfolios against market downturns.
1. When determining the risk of your investment or portfolio, take stock price volatility into account.
2. Low beta stock portfolios typically beat high beta stock portfolios. The key to successful investing is having stocks with less volatility.
3. A small number of beta strategies offer low-beta or volatility in comparison to broad market benchmarks.
4. According to research and surveys, adding low-beta companies to your portfolio doesn't appear to pose any particular risks.
5. Stocks of infrastructure and real estate with high beta often perform better in rising markets and worse in declining markets. Contrarily, low-beta equities like FMCG and Pharma do not increase or fall as much as the market does.
6. Since the financial crisis, low volatility equities have performed better.
7. Low-beta investing strategies can give risk-averse investors a means to keep some of the gain potential from stocks while also controlling the risk in their portfolio.
8. Low-beta stocks exhibit the predicted consistent share price of bond proxy stocks.
Methodology to calculate the Beta
Beta = Cov(x,y) / Var(x)
Y is the returns on your portfolio or stock - DEPENDENT VARIABLE
X is the market returns or index - INDEPENDENT VARIABLE
Variance is the square of standard deviation.
Following are the Top Low Beta stocks in 2023
|S.No.||Name||CMP Rs.||Price/Earnings||Mar Cap Rs.Cr.||Div Yld %||ROCE %||Debt / Eq|
|3||C D S L||1133.15||40.58||11841.42||1.41||31.46||0.00|
DisclaimerInvestment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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