Stock Beta Calculator
Compute a stock's beta from its correlation with the market and the two return volatilities.
Input Data
Results
At a glance:Beta = correlation x (stock volatility / market volatility), equivalent to covariance / market variance. Beta = 1 moves with the market; >1 amplifies; <1 calmer; negative is inverse. In Hong Kong, proxy the market with the Hang Seng Index. WARNING: Beta is history-based, sensitive to period/frequency/index; it captures only systematic risk; past beta may not persist.
Formula
Beta = correlation x (stock volatility / market volatility).
Equivalently, beta = covariance(stock, market) / variance(market).
$$\\beta = \\rho_{i,m} \\times \\dfrac{\\sigma_i}{\\sigma_m} = \\dfrac{\\text{Cov}(r_i, r_m)}{\\sigma_m^2}$$How to Use
- Enter the correlation between the stock and the market.
- Enter the stock and market volatilities (annualised standard deviation).
- View the stock's beta.
FAQ
What is a high beta stock?
Beta above about 1.2 is high (swings more than the market); below 0.8 is defensive. Hong Kong's property and some tech names often run above 1; utilities and telecoms below 1.
Does beta change over time?
Yes. Beta differs by sample period, frequency (daily/monthly) and benchmark. It is typically estimated from 1-5 years of monthly data against the Hang Seng Index.
What is a negative beta?
The stock tends to move opposite the market (some hedges, gold, shorts). Negative beta can rise when the market falls, offering diversification value in downturns.
Does beta = 0 mean risk-free?
No. Beta = 0 means no correlation with the market (zero systematic risk), but the stock may still carry company-specific (unsystematic) risk. Diversification removes unsystematic risk, not the business risk itself.
How do I interpret beta for Hong Kong stocks?
Use the Hang Seng Index as the market proxy and Exchange Fund Bill yields as the risk-free proxy in CAPM. Note that HK market beta estimates can be noisier for small caps and China-related names; treat beta as one input, not a verdict, and combine with fundamentals, liquidity and policy risk.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.