Question

Hi Guys,

Is it possible to find negative beta? In positive case, why does it occur?

Answer 1

Yes it is theoretically possible to have a negative beta when the returns of the market are negatively correlated with the returns of a company; however, you should never use a negative beta in CAPM.

Answer 2

BruLee, when there´s a negative beta, what´s the beta´s value that I should use in CAPM?

Answer 3

Actually, I made a mistake, you can use a negative beta in CAPM; however, there are no stocks with negative betas. Sorry for making a mistake :).

Answer 4

BruLee, I´ve read that, when there´s a negative beta , an asset acts as insurance against a macro economic risk.

Answer 5

Yes, that is correct. I also read something about using an absolute value for the beta if it is negative. It all comes down to what you would do.

Answer 6

Brulee, if you can, Send to me that article. It´s a very impresive theme.

Answer 7

It was a question and answer forum where people gave their opinions. I don't remember which one exactly since there are so much people talking about this same subject.

This is where you should start searching:
http://www.google.com.lb/search?sourceid=chrome&ie=UTF-8&q=negative+betas+%2B+capm

Answer 8

Ok. In fact, I used a regression on brazilian firm´s stock and I found the negative beta. But, I used data from brazilian market, i.e, the brazilian data are volatil and poor.

Answer 9

Can you send me the data or the link of the stock? I'll take a look at it tomorrow.
Thanks.

Answer 10

Ok. Tomorrow I´ll send you. But here is 1:14 p.m. I gotta go.

Answer 11

I've never seen a positive beta. Those fish fight like crazy. I wouldn't trust a pet store that's trying to sell you a peaceful beta. The only reason a positive case would occur is because they are lying or the fish is dead.

Answer 12

You've never seen a positive beta? I think you're a bit lost my friend.

Answer 13

He´s talking about beta (the fish). It sounds easier to understand than beta coefficient. lol.