1) Beta is a very important market risk measure of stocks and portfolios. The article in the following link is provided by Value Line, which is an investment research company. The article explains the basics of beta in greater details. Please read the article until you understand it and let me know if you have any questions about anything mentioned in the article.
A simply interpretation of beta is that when the market return (e.g. S&P 500 index return) is 1%, the return of the stock or portfolio will be beta%. For example, if the beta of the stock is 2.4, the return of the stock will be 2.4% if the market return is 1%. If beta of a stock is -2, then the return of the stock will be -2% when the market return is 1%.
Go to finance. yahoo. com and search for the beta of a company you choose. Beta is given under the summary tab of the company. State when the market return is 0.5%, how much will be the return of the company?
2) In theory, beta can be any number, negative, zero, or positive.
A positive beta means the stock/portfolio moves in the same direction with the market.
A zero beta means the stock/portfolio moves independently with the market.
A negative beta means the stock/portfolio moves in the opposite direction with the market.
what kind of companies or assets do you think will have negative betas?