Definition
Beta stocks are stocks that are measured based on how much they move compared to the overall market. Beta shows the level of risk or volatility of a stock. A beta value helps investors understand whether a stock is more stable or more risky than the market.
Example
When a stock has a beta of 1, it usually moves in line with the market. If the market goes up by 10%, the stock may also go up by around 10%. When a stock has a beta of 1.5, it is more volatile. If the market rises by 10%, the stock may rise by 15%. Similarly, if the market falls, the stock may fall more.
Caution
Higher beta stocks can give higher returns but also carry higher risk. Lower beta stocks are more stable but may give lower returns. Investors should choose based on their risk tolerance and investment goals.