of the linear regression and a stability analysis must be performed.
The model can be interpreted as follows:
Alpha (intercept of the regression line) measures the
systematic return of the stock (independent of the market.
Beta (slope of the regression line) measures the
sensibility of the stock to the market.
R square of the model
shows the proportion of the total variance of the stock price
changes that can be explained by market movements. This R square is
the market risk and 1 - R square is
the unique risk (see diversification).
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