What Is Beta? Measuring a Stock's Volatility

Beta is a measure of how much a stock tends to move relative to the overall market (usually a benchmark like the NIFTY 50). It's a classic gauge of a stock's market-related risk.

Reading beta

• Beta = 1 — the stock tends to move in line with the market.
• Beta > 1 — more volatile than the market; it amplifies both rises and falls (e.g. a beta of 1.5 tends to move ~1.5× the market).
• Beta < 1 — less volatile than the market; it moves more gently (defensive stocks often sit here).
• Negative beta — rare; the stock tends to move opposite to the market.

How beta is used

Beta helps you understand a stock's risk profile and build a portfolio with a chosen overall sensitivity to the market. A high-beta portfolio swings more; a low-beta one is steadier. It's a core input to the Capital Asset Pricing Model (CAPM).

The caveat

Beta is backward-looking — computed from past price moves — so it describes how a stock has behaved, not how it must behave next. You can estimate it yourself from price history by regressing the stock's returns against the index's.