Personal Finance & Money Asked by Big M on June 8, 2021
I am reading through some stock analysis documents (unfortunately they don’t seem to be available online). They calculate something that they call "risk". For Amazon stocks its around 18 (maybe percent?) for the past 10 years.
For other (valuable/emerging) companies it’s also between 10 and 25 in the period of the past 10 years.
Unfortunatelly they do not clearly define how the risk value is calculate. It seems like the chance of losing money (when bought at any day within the 10 year period and sold anytime later – whats the chance of losing money?) and the average loss is somehow used.
Does anybody have an idea what risk measure this could be?
The measures that I know/researched are usually around 1 or 100.
Sidenote:
For Amazon I also calculated:
In finance, "risk" is usually defined as "variance of returns". There are other measures of risk that focus more on losses (VaR, expected loss, etc.) but most likely the measure you're looking at is the annualized variance of periodic returns. So if you're looking at daily returns (as a percentage), to annualize, you would multiple the daily variance by 252 (since there are approximately 252 trading days in one year). If you have weekly returns, you'd multiply by 52, etc.
Answered by D Stanley on June 8, 2021
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