Measuring risk- your guide to stock investment

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When investing, you will be facing risk. The higher the risk, the higher the return you will get. When you are buying stocks, you are facing the risk of losing your money. Risk can be measured with beta. Higher beta means, it has high risk because volatility is high. Stocks with beta more than one, will have high correlation with the market index. Therefore, if the market index is going up, the stocks with beta more than one will likely be up too. If we are in a bull market, you should buy stocks with beta more than one. In addition, if we are in a bear market, you should buy stocks with beta less than one. These stocks are also called defensive stocks.

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