5 thoughts on “What does Beta income and Alpha income mean? Generally used in the field of investment”
Cassandra
Alpha: The excess income of the investment portfolio shows the ability of manager; Beta: market risk, originally mainly refers to the systemic risk or income of the stock market. In other words, those who run the market are called Alpha, and they are called Beta with the ups and downs of the market. In the 1980s, everyone's cognition based on the CAPM model can be decomposed into BETA (completely related to the benchmark) and Alpha (unrelated to the benchmark). In the 1990s, people were no longer limited to the single factor in the market. The APT model and the Barra multi -factor model expanded the scope of people's choice, including regional/industry factors. This information In a simple formula to calculate the beta coefficient 1, determine the risk -free interest rate. This is the rate of return that investors are expected to obtain in risk -free investment, such as US Treasury vouchers invested in US dollars, German government bonds with euro transactions and investment. The number is usually expressed in percentage. 2, determine the stock yield, market (or representative index) yield, respectively. This numbers are also represented by percentage. Under normal circumstances, data calculation of data is needed to use several months. 3, the yield of the stock minus the risk -free interest rate. If the yield of the stock is 7%and the risk -free interest rate is 2%, the difference between the two is 5%. In calculating the beta coefficient, usually (although not necessary) to use the representative index of the market to be calculated. For the US stock market, the Standard
Alpha: Excess income of investment portfolios, expressing managers' ability; beta: market risk, initially mainly refers to the systemic risk or income of the stock market. In other words, it is called Alpha for the winning market, and it is called Beta with the ups and downs of the market. 80s, everyone's cognition based on the CAPM model Portfolio Return can be decomposed as beta (completely related to the benchmark) and Alpha (unrelated to the benchmark). 0s, people are no longer limited to the single factors of the market. The APT model and the Barra multi -factor model have expanded the scope of people's choice factors, including regional/industry factors. 000 years later, people's understanding of factor has expanded to a new field: style factor and strategic factors. After this, people realized that a large part of the Alpha that they thought before was the non -traditional BETA. For example, in the domestic private equity market, investors gradually realized that the style of SIZE (market value) is not Alpha. The stock market as an example. The revenue of stocks is affected by many factors. For example, the three factors of the classic Fama French tells us that the market value, valuation level, and market factors can explain stock returns, and low low, and low low, and low low, and low low, and low low, and low low, and low low, low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, low, and low low. Market value and low valuation can obtain excess returns. Then, we can build a combination by looking for the driver factor that can obtain Alpha. Because we do n’t know the rise and fall of the combination, we can ensure that the difference between the combination and the benchmark is expanding. Hedge obtain stable differences (alpha income), which is the legendary market neutral strategy.
I believe everyone has heard of Beta income and Alpha income often mentioned in investment, but many people do not understand what they mean and what are the relationships. The concept of 1.α α coefficient refers to the difference between the absolute return of investment or fund and the expected risk return calculated according to the β coefficient. Absolute return or additional return is the actual return of the fund/investment minus the income -free investment income (a period of time for a one -year bank deposit in China). ABSOLUTE RETURN or Excess Return is the actual return of funds/investment to minus risk -free investment income (generally adopted Treasury interest rates in the same period). The absolute return is to measure the investment technology of an investor or fund manager. Expert Return Betta coefficient β and market returns reflect the return of investment or fund due to overall market changes (for more calculations of expected returns, please refer to the capital asset pricing model Capital Asset Model (CAPM)). 2. What is β The primary school physics tells us that when a person walks on the train during the driving, his speed is equal to his relative speed of the train plus the speed of the train. The additional yield of the securities investment portfolio is equal to its relative yield and the part of the entire market. But the difference is that the speed of the train is the same for everyone on the same train, and the rate of yields provided by each investment portfolio may be different. This is the Beta coefficient, which depends on the correlation between this investment portfolio and the market, as well as the risk of the market compared to the market. The Beta coefficient of general investment portfolios is usually positive. In this way, if the entire market has risen, the average yield of the entire market multiplied by the Beta coefficient is positive, and the contribution to the investment portfolio is positive. But if the entire market falls, the contribution of this part of the investment portfolio is negative. The Beta coefficient of the stock index fund is generally around 1. After decomposing yields into Alpha and Beta, one of the most important facts is that the value of these two parts is different. Simply put, Alpha is rare, and Beta is easy. As long as the ratio of cash and stock index funds (or stock index futures) in the investment portfolio can easily change the Beta coefficient, that is, the income from the entire market part in the investment portfolio.
Investment income of asset portfolios = Alpha returns beta income other income alpha revenue refers to absolute income, which is generally obtained by asset managers through securities selection and timing. beta income refers to the relative income, which is the income obtained by the manager's risk. The overseas hedge funds (Hedge Fund) generally pursue absolute returns and seek more Alpha revenue.
BETA income refers to the average basic income, and Alpha returns refer to excess returns. The conflict between the two is the simple point of view of small risks and big income. The actually use these two words when discussing asset management goals.
Alpha: The excess income of the investment portfolio shows the ability of manager; Beta: market risk, originally mainly refers to the systemic risk or income of the stock market. In other words, those who run the market are called Alpha, and they are called Beta with the ups and downs of the market. In the 1980s, everyone's cognition based on the CAPM model can be decomposed into BETA (completely related to the benchmark) and Alpha (unrelated to the benchmark). In the 1990s, people were no longer limited to the single factor in the market. The APT model and the Barra multi -factor model expanded the scope of people's choice, including regional/industry factors.
This information
In a simple formula to calculate the beta coefficient
1, determine the risk -free interest rate.
This is the rate of return that investors are expected to obtain in risk -free investment, such as US Treasury vouchers invested in US dollars, German government bonds with euro transactions and investment. The number is usually expressed in percentage.
2, determine the stock yield, market (or representative index) yield, respectively.
This numbers are also represented by percentage. Under normal circumstances, data calculation of data is needed to use several months.
3, the yield of the stock minus the risk -free interest rate. If the yield of the stock is 7%and the risk -free interest rate is 2%, the difference between the two is 5%.
In calculating the beta coefficient, usually (although not necessary) to use the representative index of the market to be calculated. For the US stock market, the Standard
Alpha: Excess income of investment portfolios, expressing managers' ability;
beta: market risk, initially mainly refers to the systemic risk or income of the stock market.
In other words, it is called Alpha for the winning market, and it is called Beta with the ups and downs of the market.
80s, everyone's cognition based on the CAPM model Portfolio Return can be decomposed as beta (completely related to the benchmark) and Alpha (unrelated to the benchmark).
0s, people are no longer limited to the single factors of the market. The APT model and the Barra multi -factor model have expanded the scope of people's choice factors, including regional/industry factors.
000 years later, people's understanding of factor has expanded to a new field: style factor and strategic factors. After this, people realized that a large part of the Alpha that they thought before was the non -traditional BETA. For example, in the domestic private equity market, investors gradually realized that the style of SIZE (market value) is not Alpha.
The stock market as an example. The revenue of stocks is affected by many factors. For example, the three factors of the classic Fama French tells us that the market value, valuation level, and market factors can explain stock returns, and low low, and low low, and low low, and low low, and low low, and low low, and low low, low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, and low low, low, and low low. Market value and low valuation can obtain excess returns. Then, we can build a combination by looking for the driver factor that can obtain Alpha. Because we do n’t know the rise and fall of the combination, we can ensure that the difference between the combination and the benchmark is expanding. Hedge obtain stable differences (alpha income), which is the legendary market neutral strategy.
I believe everyone has heard of Beta income and Alpha income often mentioned in investment, but many people do not understand what they mean and what are the relationships. The concept of
1.α
α coefficient refers to the difference between the absolute return of investment or fund and the expected risk return calculated according to the β coefficient. Absolute return or additional return is the actual return of the fund/investment minus the income -free investment income (a period of time for a one -year bank deposit in China).
ABSOLUTE RETURN or Excess Return is the actual return of funds/investment to minus risk -free investment income (generally adopted Treasury interest rates in the same period). The absolute return is to measure the investment technology of an investor or fund manager. Expert Return Betta coefficient β and market returns reflect the return of investment or fund due to overall market changes (for more calculations of expected returns, please refer to the capital asset pricing model Capital Asset Model (CAPM)).
2. What is β
The primary school physics tells us that when a person walks on the train during the driving, his speed is equal to his relative speed of the train plus the speed of the train. The additional yield of the securities investment portfolio is equal to its relative yield and the part of the entire market. But the difference is that the speed of the train is the same for everyone on the same train, and the rate of yields provided by each investment portfolio may be different. This is the Beta coefficient, which depends on the correlation between this investment portfolio and the market, as well as the risk of the market compared to the market.
The Beta coefficient of general investment portfolios is usually positive. In this way, if the entire market has risen, the average yield of the entire market multiplied by the Beta coefficient is positive, and the contribution to the investment portfolio is positive. But if the entire market falls, the contribution of this part of the investment portfolio is negative. The Beta coefficient of the stock index fund is generally around 1.
After decomposing yields into Alpha and Beta, one of the most important facts is that the value of these two parts is different. Simply put, Alpha is rare, and Beta is easy. As long as the ratio of cash and stock index funds (or stock index futures) in the investment portfolio can easily change the Beta coefficient, that is, the income from the entire market part in the investment portfolio.
Investment income of asset portfolios = Alpha returns beta income other income
alpha revenue refers to absolute income, which is generally obtained by asset managers through securities selection and timing.
beta income refers to the relative income, which is the income obtained by the manager's risk.
The overseas hedge funds (Hedge Fund) generally pursue absolute returns and seek more Alpha revenue.
BETA income refers to the average basic income, and Alpha returns refer to excess returns. The conflict between the two is the simple point of view of small risks and big income.
The actually use these two words when discussing asset management goals.