Definition of Risk measure
Risk measure are mathematical actions that are historical predictors of financial commitment risk and motions, and they are also major components in modern profile theory.
Brief Explanation of Risk measure
Modern profile theory is an ordinary financial and academic technique for evaluating the performance of a regular or a regular finance as compared to its conventional catalog. There are five principal risk measures, and each measure provides a unique way to look at the danger present in investment strategies that are under consideration. The five measures include the alpha, beta, R-squared, conventional difference and Ho rate. Risk measures can be used independently or together to perform a danger assessment. When you compare two potential investment strategies, it is wise to compare like for like in order to determine which financial commitment holds the most risk. Alpha actions risk relative to the marketplace or a chosen conventional catalog. Beta measures the volatility or systemic risk of finance in comparison to the marketplace or the chosen conventional catalog. R-Squared actions the percentage of an investment’s movement that is because of motions in its conventional catalog.