Difference between Systematic risk and Beta

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Santosh Mahato (Querist)
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01 October 2010 Dear Experts,

Can any one tell me the difference between systematic risk and Beta security?

If beta is also systematic risk then why not we calculate beta when question ask for calculation of systematic risk?

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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01 October 2010 Beta is a measure of Systematic risk. It helps us understand how risky is a particular security.

The following write up may be useful
https://en.wikipedia.org/wiki/Modern_portfolio_theory

Santosh Mahato

Santosh Mahato (Querist)
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01 October 2010 Theoritically i know it but try to reply my second question it is based on CA final practial question.

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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02 October 2010 Beta itself is not systematic risk. It measures the sensitivity of a stock with reference to market. With the help of beta you can find the systematic risk. Risk is represented in the some units whereas beta is absolute.

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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08 October 2010 Hi Santosh,

To the best of my knowledge, both Beta and systematic risk are same.

Can you type the whole question, so that I can help assist.

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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08 October 2010 Suraj, Beta measures the systematic risk (risk of the security in relation to the market)

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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08 October 2010 The measure (beta) cannot be the risk itself.

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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08 October 2010 Agreed that beta measures only the systematic risk. The risk of the asset in relation to the whole market.

Standard deviation can be used as a stand alone risk measure of the asset.

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