Alpha & Beta

Arun_K_Bhaskar Updated   
How to use Alpha(α)?

If Alpha is positive the stock outperforms, if the value is negative means the stock underperforms.
α < 0: The investment has earned too little for its risk (or, was too risky for the return)
α = 0: The investment has earned a return adequate for the risk taken
α > 0: The investment has a return in excess of the reward for the assumed risk

How to use Beta(β)?

β = 1: Exactly as volatile as the index
β > 1: More volatile than the index
β < 1 > 0: Less volatile than the index
β = 0: Uncorrelated to the index
β < 0: Negatively correlated to the index
β > 2: Trending stock
Higher the β higher risk/reward
Example: If the beta is 1.1, the share price is like to move by 10% more than the index

Trading Tip

Choose a stock with Alpha greater than 0 and Beta greater than 1.9 for intraday in 5min timeframe for long positions
Remember that such stocks will have high risk and high reward
Shortlist stocks with Beta greater than 1.9 for next day in 5min timeframe
Release Notes:
Update v1.1
Added up or down arrows which indicates whether the value is increasing or decreasing compared to the previous value
Release Notes:
Updated position.
Release Notes:
Updated text alignment and text position.
Release Notes:
Converted from label to table view.
Release Notes:
Updated on 28 May 2022
  • Changed the visualization to Oscillator, helps to see the Historical values also.
  • Converted to Pinescript version 5.
Release Notes:
Updated on: 15 Nov 2023
Formula Update:
  • Refined mathematical formula for better accuracy.
Multi-Timeframe Integration:
  • Added data from various timeframes for in-depth analysis.
Look and Feel Enhancements:
  • Enhanced visual design for user-friendly experience.
  • Refer tooltips for additional insights.
Open-source script

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