This is widely used in regression analysis and in most times in capital asset pricing models (CAPM). The beta coefficient is a measure of an asset's risk and return in relation to a broad market, meaning that it will show, more or less, how the asset or a portfolio of assets will respond as the market moves up or down. It is used in the capital asset pricing model and regression analysis.
It also can be the measurement of how much the value of a particular share has changed in a particular period of time, compared to the average change in the value of shares in the stocks.
Beta coefficient is a measure of the volatility, or systematic risk, of a security or portfolio, in comparison to the market as a whole. It acts as an indicator of a stock's systematic risk which is the undiversifiable risk inherent in the whole financial system.
Calculations using beta coefficent helps investors understand whether a stock moves in the same direction as the rest of the market, and how volatile (risky) it is compared to the market.
