How to measure i)stock volatility and ii) stock liquidity?

Question

what are the techniques,formulae and indicators to use?

thanks

Answer 1

Beta is to compare the Volatility w.r.t to the underlying Index (like Sensex or NSE). It does not reflect a stocks volatility

A Stock's volatility (i.e price change) is best measured by its Standard Deviation over a period of time

A practical way to calculate this can be found at http://stockcharts.com/school/doku.php?i...

[You can find this any statistics book]

Stock Liquidity :  can be measured  by the Stocks Volume (buying and selling). If the share has a high daily volume then the stock is considered to be liquid because you are more likely to find a buyer to sell your stock .

Answer 2

with beta 1 + and beta 1 - with x mark

Answer 3

Beta shows how its moving with respect to the market. 1.5 beta means its 50% more volatile than the market.

Answer 4

The Indian Volatility Index is derived based on the following :



Time to expiration,

Forward index level that is derived from option prices,

Strike price of the out of money option

Interval b/w the strike prices

First strike below the forward index level

Risk free interest to expiration and

The midpoint of the bid-ask spread for each option