A measure of a stock's (financial instrument) risk of volatility compared to the overall market. The market's beta coefficient is 1.00. Any stock with a beta higher than 1.00 is considered more volatile than the market, and therefore riskier to hold, whereas a stock with a beta lower than 1.00 is expected to rise or fall more slowly than the market.
In strict percentage terms, a stock with a beta of 0.75 is likely to rise or fall 0.75 per cent if the market rises or falls 1.00 per cent. Low beta
stocks are also called defensive stocks because investors like to hold them when the market is on a downtrend or is particularly volatile. High beta
stocks tend to be favoured when the market is rising steadily and investors are happy to take greater risks in order to maximise returns.