Beta coefficients

2011-07-31 6:29 am
Source current beta coefficients for two large, well-known companies in different industries, one company with beta less than 1 and one company with beta greater than 1. Explain what thesencoefficients mean and, considering what the companies do, explain why their betas differ.

回答 (2)

2011-08-09 12:44 am
✔ 最佳答案
From a reliable source, Hong Kong and China Gas Limited (3.HK) has beta of 0.54 while that of Sino Land (83.HK) has beta of 1.54. Beta coefficient measures the price relationship of that stock with the market, Hong Kong and China Gas Limited will move by 0.54%, if the market such as Hang Seng Index moves by 1%. Similarly, if Hang Seng Index moves by 1%, then Sino Land will move by 1.54%. They have different values of Beta sofficients because China Gas Limted is an utility stock which will be affected by lesser extent than Sino Land which is property stock by the economic conditions. In other words, if investors preceive the economic conditions will turn negative, Sino Land will be more difficlut to make profits but China Gas Limited will face less pressure on profitability, as people will consume 'gas' even in poor economc conditions. Therefore, the China Gas Limited's beta is smaller than the that of Sino Land Limited.
2011-07-31 7:53 am
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