The modern economic system, which forms the conditions of existence for large corporations, enterprises and even state-owned companies through the creation of joint-stock companies, has already become familiar to any person. Of course, in our country, investing in securities does not have such a level of popularity among the population as in the rest of the civilized world with a developed market system of economic relations. However, recent trends indicate an increasing reorientation of simple depositors of bank deposits to more complex investment systems. This, in turn, is a good signal for Russian society, which indicates the gradual approximation of our homeland to the Western standard of living and the priority of values. Of course, God forbid, only the economic side of the modern civilized world, without its absurd sides.
Beta ratio
The relationship between capital owners and joint-stock companies takes place in the stock markets. They are one of the main segments of the financial system of a modern market economy. With their help, there is a mobilization of the population’s funds and a reorientation of capital in the necessary direction of the world economy. At the same time, stock markets organize direct cooperation between the capital of the investor and the joint-stock company. To ensure the investment process in accordance with the wishes of the investor, there is a mathematical concept of a risk measure called a beta coefficient. This indicator reflects the possibility of risk or its absence with the contribution of funds to a particular
joint-stock company. So the beta coefficient
provides the investor with information expressed in statistical data for a certain period of time the existence of a joint stock company in the securities market and the ratio of its value to market fluctuations. This indicator is able to inform the investor about the possibility of increasing the value of the securities portfolio with a general increase in the stock market or its decrease with a general drop. It allows you to determine the necessary balance between risk and
return on securities.How to calculate the beta coefficient?
To determine this indicator, methods of mathematical covariance are used, that is, methods of calculating a value that reflect the dependence of two random values. Thus, the beta coefficient of the market portfolio is dependence, expressed in numerical form, on the current indicator of market fluctuations for a certain before time. That is, with the general market growth of 10% and a beta coefficient of 0.5 units, the value of the joint-stock company's securities portfolio will grow by only 5%. To calculate this indicator, the covariance-dispersion formula, beta coefficient is used according to which is determined in the following way:
βa = Cov (ra, rp) / Var (rp), where:
- ra is the value determining this coefficient;
- rp - securities market;
- Cov - covariance of quantities;
- Var - variance of the securities market.