Systematic Risk vs Unsystematic Risk. How to calculate Beta ?

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When a company starts a business has to face two kinds of risk one is systematic and another is unsystematic risk. 

1. Systematic risk -  It is non diversifiable risk. It exists  because of macroeconomic factors like- Political, Legal, Economical, Social, Legal Rules and Laws. Because it exists into the system so it is a non diversifiable risk. 

 2. Unsystematic risk -  It is diversifiable risk. It exists  because of microeconomic factors like- Weak internal control, Weak management, Bad Strategies, Bad product line.   
Example of unsystematic risk - Business Risk or Financial Risk.

When we talk about beta it is a systematic risk which is non diversifiable. Which measures the volatility of the stock with respect to the market.

High beta stocks: These stocks outperforms the market when market rises provided financials should allow and falls heavily when the market does fall.

Low beta Stocks: These stocks neither outperform nor drastically fall but continue to grow as per their financial conditions.

Let us understand,

How to calculate beta on excel with the help of this small video.





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