Know which stocks to pick for short term investment as per beta coefficient analysis (Exclusive Study)

A stock's beta coefficient is a measure of its volatility over time compared to a market benchmark (NEPSE). A beta of 1 means that a stock's volatility matches up exactly with the market. A higher beta indicates great volatility, and a lower beta indicates less volatility. Generally, risk taking investors in short term prefer company with high volatility for short term capital gain. The company with beta greater than the market has higher volatility and risk adverse investors prefer company with lower beta than market to avoid market risk. Sharesansar has analyzed the 6 months past data of specific company and NEPSE for calculating the beta of below listed company.   Most of the commercial banks' beta is higher than the market (NEPSE) signaling high volatility where as Nepal Investment Bank (NIB), Everest Bank (EBL) and Nabil Bank Limited (NABIL) have beta lower than the market. Among insurance companies, only Life Insurance Company Limited (LICN) has beta lower than the market. Chilime Hydropower Company Limited (CHCL) also has lower beta than the market i.e. at 0.73. Nepal Telecom has the lowest beta among all the listed companies i.e. 0.32. Time frames are also highly important and should be customized to your specific investment horizon. If you're a buy and hold investor, you should use a longer time period to calculate beta, maybe five or even 10 years. If you're a trader or a short term investor, buying and selling frequently, you should use a beta over a much shorter time frame, potentially just a few weeks, days, or even less.