i What this calculator does
Beta measures how much a share moves relative to the market. A beta of 1.3 means that when the index rises 10%, the share has historically risen about 13%, and fallen further when the index fell.
It captures systematic risk, the part of volatility that diversification cannot remove, which is why the capital asset pricing model uses it to set an expected return. It is backward looking and unstable, so treat it as a description rather than a forecast.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Beta Calculator
Every field has a working default, so the calculator produces a result the moment the page loads. Replace the defaults with your own figures and the output updates when you press the button.
- 1. Share Volatility (% a year)
- 2. Index Volatility (% a year) JSE All Share or your benchmark
- 3. Correlation with the Index Between -1 and 1
- 4. Risk-Free Rate (%)
- 5. Expected Market Return (%)
- 6. Debt to Equity Ratio For the unlevered beta
The result panel reports:
- Beta Move per 1% index move
- Expected Return (CAPM) Risk-free plus beta times premium
- Unlevered Beta Stripping out the debt effect
Alongside the headline figures, the calculator reports share volatility, index volatility, correlation, equity risk premium. Those are the numbers that usually explain why the headline result came out where it did.
The breakdown below the result shows every step of the arithmetic, so you can check the figure rather than trust it. The formula panel names each input as it is used, which is useful if you want to reproduce the calculation in a spreadsheet.
Frequently asked questions
What does a beta above 1 mean?
That the share has historically moved more than the market, in both directions. JSE resource shares often carry betas well above 1 because commodity prices amplify the cycle. Defensive sectors such as food retail typically sit below it.
Can beta be negative?
Yes, if the correlation with the index is negative, which means the share has tended to move against the market. Gold miners sometimes show this during risk-off periods, though the relationship is unstable and rarely persists.
What is the difference between levered and unlevered beta?
Levered beta, the one you observe, includes the effect of the company's debt, which amplifies equity volatility. Unlevered beta strips that out to isolate the business risk, which is what you need when comparing companies with different capital structures.
Which index should I use?
The one that represents the opportunity set you are choosing from. For a South African portfolio that is usually the JSE All Share or the Top 40. Measuring a JSE share against the S&P 500 produces a number that is technically correct and practically meaningless.
How reliable is beta?
Moderately, and less so over short periods. It is estimated from past data and shifts as a business changes. The R-squared figure here tells you how much of the share's movement the market actually explains, and when that is low the beta is not saying much.
Does high beta mean high return?
CAPM says it should, in theory, because investors demand compensation for systematic risk. The empirical record is mixed, and low-volatility shares have historically done better than the model predicts. Treat the expected return as a benchmark rather than a forecast.
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