What it is
Beta is a regression coefficient: it captures how the stock's returns have historically tracked the returns of a market index (e.g. Nifty 50 or S&P 500).
- β = 1.0 — moves with the market on average.
- β > 1.0 — amplifies market moves. A 1% market move → bigger stock move.
- β < 1.0 — dampens market moves. Defensive names often sit here.
- β < 0 — moves opposite to the market (rare in real equities; common in inverse ETFs).
What it isn't
Beta describes historical co-movement, not the total risk of the stock. Company-specific shocks (a product recall, a fraud allegation) aren't captured by beta — that's idiosyncratic risk.