To calculate beta, individual stocks are ranked against a benchmark to see how much they deviate from the average. Normally, a beta of 1.0 is assigned to a benchmark, such as the S&P 500, and then stocks that swing higher than 1.0 are more volatile, and stocks less than 1.0 are less volatile.
Full Answer
What are the most volatile stocks?
Most volatile stocks are companies that have had large price swings, leading to a significant gap between these companies' intraday highs and intraday lows.
How do you find volatile stocks?
One way to find volatile stocks is to calculate the beta, or risk of those stocks, using mathematical analysis. This takes into account past information for the company stock and compares it to benchmarks of the industry or the market as a whole. Websites that offer stock investment advice may also list volatile shares for trade.
How to turn Excel into a stock volatility calculator?
With MarketXLS, you can simply use the stock volatility function to turn Excel into the stock volatility calculator. Volatility comes in various forms and what MarketXLS volatility functions return is the simplest form of volatility.
What is the volatility of a stock?
Start trading The volatility of a stock is the fluctuation of price in any given timeframe. The most volatile stocks may demonstrate price fluctuations of up to several hundred percent during the day. In the developed markets volatility tends to be much lower and doesn’t exceed 20-30% during the quiet periods.
How do you know which stock is more volatile?
The wider the Bollinger Bands, the more volatile a stock's price is within the given period. A stock with low volatility has very narrow Bollinger Bands that sit close to the SMA.
Which category of stock is most volatile?
Technology stocks are often more volatile than others because they are often valued based on potential future performance.
What are the 5 most volatile stocks?
Here is the list of 10 most volatile stocks for investmentsGarden Silk Mills. ... Madhucon Projects Limited. ... KM Sugar Mills. ... 3i Infotech Ltd. ... GVK Power & Infrastructures Ltd. ... Jubilant Industries. ... Magma Fincorp Ltd. Magma Fincorp stock. ... Take Solutions Limited. Take Solutions stock.More items...•
Which stock is most volatile for intraday?
Highly volatile intraday stocks...Sr.Stock Name% Chg1Apar Industries Limited8.94%2Pidilite Industries Limited5.36%3Godrej Consumer Products Limited4.65%4Hindustan Unilever Limited4.05%21 more rows
How to trade volatile stocks?
The first step is to determine the acceptable level of risk for a stock to have and then deciding which investment strategy is best for your situation. Some day traders can make many transactions per hour buying and selling shares of the most active stocks.
What should I know before investing in volatile stocks?
It’s important to determine your available investing funds, the length of time able to invest, retirement and estate plans, and overall investing strategy.
Why is volatility important?
Volatility is important because it gives investors a range of investment options that allows one to tailor an investing strategy to individual needs.
Why do day traders invest in volatile stocks?
Day traders and those who invest in volatile stocks may make a high volume of trades each day to try and capture profit from price fluctuations. Swing traders may take a longer approach by investing in volatile stocks over days or weeks, or even longer. Keep in mind that volatile stocks are risky.
Why are volatile stocks risky?
Regardless, volatile stocks are risky for investors because their prices can change rapidly and unpredictably. However, these rapid value changes offer the potential for rapid gains as well. Investors can find volatile stocks by searching for shares that change price rapidly throughout the day.
What is Market Beat stock screener?
One such tool offered by MarketBeat is a stock screener for certain subscribers. A stock screener is a tool to help investors sort stocks by certain criteria. This can help investors pinpoint those shares which are the desired level of volatility. The specific criteria will depend on your investment strategy.
How to annualize volatility?
To annualize 1-period of volatility, simply multiply it by the square root of the number of periods per year ( N ). For instance, if there were 252 trading days in the year, the annualized volatility will be computed as the 1-day volatility multiplied by the square root of 252.
What is the most commonly used method of determining historical volatility?
The standard deviation of logarithmic returns is the most commonly employed method of determining historical volatility. To compute historical volatility using this approach, simply determine the sample standard deviation of n last returns as follows:
What is historical volatility?
Historical statistical volatility provides an indication of how the stock price has changed over a given period of time. While some analysts may use historical volatility as a means of predicting future stock performance, it may not necessarily be a correct indication as historical influences may have driven price changes.
What is the standard deviation of logarithmic returns?
The standard deviation of logarithmic returns, which is also referred to as centered historical volatility. The zero-mean method, which is also referred to as non-centered historical volatility.
What is portfolio volatility?
Portfolio volatility is a measure of portfolio risk, meaning a portfolio's tendency to deviate from its mean return. Remember that a portfolio is made up of individual positions, each with their own volatility measures. These individual variations, when combined, create a single measure of portfolio volatility.
What is standard deviation in stock?
The standard deviation (volatility) of stock 1. The standard deviation of stock 2. The covariance, or relational movement, between the stock prices of stock 1 and stock 2. To calculate portfolio volatility, the logic underlying the equation is complicated, but the formula takes into account the weight of each stock in the portfolio, ...
Do stock prices fluctuate over time?
In actuality, stock prices and index values often have asymmetrical distributions and can stay unusually high or low for long periods of time. In addition, a stock's or index's volatility tends to change over time, which challenges the assumption of an unchanging statistical distribution of returns. While performing historical volatility ...
What Is Historical Volatility?
Calculating Logarithmic Returns
| COMPANY | CURRENT PRICE | VOLUME | AVERAGE VOLUME |
|---|---|---|---|
| BCAUY Brilliance China Automotive | $8.49 +0.0% | 1.97 million | 9,398 |
| XBIO Xenetic Biosciences | $2.52 +0.0% | 300.55 million | 1.02 million |
| SCKT Socket Mobile | $8.35 +0.0% | 52.49 million | 317,481 |
| NAOV NanoVibronix | $2.61 +0.0% | 107.91 million | 217,029 |
| MOXC Moxian | $17.61 0.0% | 7.76 million | 3.52 million |
| UPC Universe Pharmaceuticals | $3.04 0.0% | 12.12 million | 908,402 |
| IGOI IGO | $3.85 +0.0% | 8,450 | 273 |
| TAL TAL Education Group | $6.00 0.0% | 259.13 million | 18.30 million |
Standard Deviation of Logarithmic Returns
The zero-mean Approach
- To calculate the stock volatility from a set of historical stock price data, you start by determining the daily logarithmic returns, which is known as the continuously compounded return. This is computed as follows: Ri = ln ( Ci / Ci-1) Where: Ri is the return of a given stock over the period i, lnis the natural log function, Ci is the closing pric...