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Hedge Funds
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Question posted: 05 29 2008 03:17:32 +0000,
2 answers, 1517 views, last activity
07 06 2010 20:18:08 +0000
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Answered by
sachin , Team Leader -(NonTechnical), Infor Global Solutions
| 06 06 2008 05:08:20 +0000
Not Rated
negative beta corresponds to assets that has returns lower than the risk-free rate. But the risk-free rate has zero correlation with all assets and negative beta asset not. So , in theory, a non-typical investor might be willing to hold a negative beta asset because -given a special comovements with other assets- it might reduce the total risk of a portfolio. More usually, some hedge funds build portfolios that have a negative beta relative to the market in order to play a contrarian strategy (not to developed here but this is probably a flaw strategy). In practice, negative beta stocks are hard to find: gold stocks, liquidation companies, pawn shops (although they are rarely listed).
In the Indian stock markets, you may find it very difficul to get the stocks with negative beta. For brief periods of times, some stocks may behave like a negative beta stock but may not necessarily be a negative beta stock. Hope this clarifies your question.
Not Rated
Negetive beta is more of a trend in the economy rather than a permanent behaviour. For example, IT stocks behave quite opposite to how markets behave these days. Primarily its because of sentiments and also cause of $/Re rate.
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