However, being a high beta stock
, we believe that it is extremely vulnerable to economic and political shocks, relative to its peers.
We expect the Emaar Mall to be a high beta stock
," Haddad said.
High beta stocks
will have larger losses when the market falls compared to those with lower beta stocks
Furthermore, high beta stocks
are more traded in January and may result in high returns [Rogalski and Tinic (1986)].
United Continental (UAL), American Airlines (AAL), and Delta Airlines (DAL) downgraded to Hold from Buy at Deutsche Bank with analyst Michael Linenberg saying in a world of "heightened" macroeconomic and geopolitical risks, economically-sensitive, high beta stocks
such as airlines typically underperform the broader market.
This is especially true for high beta stocks
, where the upside and downside potential are greater.
It is not surprising, the high beta stocks
are rebounding faster.
This provides further impetus to our favorite theme of high D/Y, high leverage and high beta stocks
. We highlight POL, PPL, ENGRO, EFERT, Fatima, HUBC, Lucky, ICI, KAPCO, UBL and DGKC as our top picks.
The decline could be because of the recent change in investors' preference high- beta stocks
. High- beta stocks
are those that move more than the overall market.
Panel data analysis also confirms that the beta is highly statistically significant in explaining a fund's total return, which implies that high beta stocks
have a lower market risk premium in comparison to low beta stocks
Zero investment portfolios that long the highest 20% of IDVOL beta stocks
and short lowest 20% of IDVOL beta stocks
have abnormal returns of about -0.27% per month.
If there is a positive relationship between expected return and risk as CAPM asserts, one should expect that higher beta stocks
would experience higher expected returns.