High Beta Stocks: Big Risk, Big Reward (YGE, MELI, VC, LDK, CVGI, TSL, AKS, DAN, SLW, CCOI)

Beta is a calculation of a stock's volatility as it relates to the market. The market has a beta of 1.0, and stocks are assigned a beta value according to how much they diverge from the overall market. For example, if a stock moves exactly the same percentage as the underlying market, it is assigned the market's beta of 1.0. If a stock moves more than the market, its beta is above 1.0. Conversely, if the stock moves less than the market, its beta is below 1.0. Example: If a stock swings 50% more than the underlying market, it is assigned a value of 1.5. If a stock swings 50% less than the underlying market, it is assigned a value of 0.5. High beta names have large price fluctuations, and thus, have big potential for profits. On the other hand, if you happen to be on the wrong side of the trade, you also have big potential for losses. Traders love stocks with higher beta since it is basically a way to maximize leverage and garner higher returns. The downside of beta is that it is a measure of past price movement and has no bearing on a stock's future volatility. Major news, earnings, policy changes, etc., may cause a reaction that dramatically alters the stock's performance, relegating the beta unreliable. Beta is not generally an applicable tool for investors with a long-term outlook. It is more valuable for traders with a shorter time perspective. Currently, the ten stocks with the highest beta are: 1) Yingli Green Energy YGE: Beta of 4.72. 2) MercadoLibre MELI: Beta of 4.55. 3) Visteon VC: Beta of 3.73. 4) LDK Solar LDK: Beta of 3.72. 5) Commercial Vehicle Group CVGI: Beta of 3.71. 6) Trina Solar TSL: Beta of 3.68. 7) AK Steel AKS: Beta of 3.58. 8) Dana Holding Corporation DAN: Beta of 3.57. 9) Silver Wheaton SLW: Beta of 3.47. 10) Cogent Communications CCOI: Beta of 3.43.