BETA VOLATILITY AND ITS CONSEQUENCES FOR HEDGING SYSTEMATIC RISK WITH REFERENCE TO STOCK MARKET DURING COVID-19

Shankar Singh, Uma and Ahmad, Waqar and Ashqi Kareem, Sallar (2021) BETA VOLATILITY AND ITS CONSEQUENCES FOR HEDGING SYSTEMATIC RISK WITH REFERENCE TO STOCK MARKET DURING COVID-19. Journal of Information Technology in Industry, 9 (3). pp. 482-492. ISSN 2203-1731

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Abstract

Hedging is frequently viewed as a high level contributing technique that supports in everyday lives and it has got nothing to do with the financial market. When a person takes life insurance to protect his family on account of his demise, this is termed as hedging. One has to pay premium on every instalment for the inclusion given by an insurance agency. Hedging is a speculation taken out to restrict the danger of another venture; protection is an illustration of a true fence. Hedging is a substantial procedure that can help ensure one’s portfolio, home, and business from vulnerability. Beta is a proportion of a stock's instability comparable to the general market. Beta helps to measure stock’s systematic risk. Systematic risk is the danger of significant economy-wide impacts, such as increase in interest rate, war, pandemic and so forth that influence the entire framework and not simply singular stocks. In a portfolio setting, deliberate danger is significant in light of the fact that it can't be broadened and should be valued. In the event that a stock moves not exactly the market, the stock's beta is under 1.0. High-beta stocks should be more hazardous however give better yield potential; low-beta stocks present less danger yet additionally lower returns. A beta of more than 1 implies that it is a forceful stock and a beta of less than 1 implies that it is a cautious stock.

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