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MetaStock
Indicator - Plotting
Alpha and Beta
rev. 01/06/97
To plot Alpha and
Beta in MetaStock follow the steps below. **The
custom indicator named Beta is required to plot
Alpha.
In the Windows versions of MetaStock:
To plot
Alpha:
- Create the
custom formulas Alpha and Beta (see below for
formula syntax).
- Open a chart of
the desired security.
- Drag the price
plot of the index you are comparing, into the
chart of the security and close the chart of
the index. **Maximize the security chart if
needed.
- Drag the custom
indicator Alpha from the Quick List and drop
it onto the price plot of the index. **The
index plot will turn a purplish color when you
are plotting on top of it.
**Note, this
formula is set to calculate Alpha over 21 periods.
To change the time periods replace each instance
of 21 in the formula with the desired number of
periods and also change the time periods in the
Beta custom indicator.
| (
Sum( ROC( CLOSE ,1 ,% ) ,21 ) - ( Fml(
"Beta" ) * Sum( ROC(
INDICATOR,1,%) ,21 ) ) ) / 21 |
To plot Beta:
- Open a chart of
the desired security.
- Drag the price
plot of the index your comparing, into the
chart of the security.
- Drag this
custom indicator from the Quick List and drop
it onto the price plot of the index.
Note, this formula
is set to calculate beta over 21 periods. To
change the time periods replace each instance of
21 in the formula with the desired number of
periods.
| (
( 21 * Sum( ROC( CLOSE ,1 ,% ) * ROC(
INDICATOR ,1 ,% ) ,21 ) ) -
( Sum(
ROC( CLOSE ,1 ,% ) ,21) * Sum( ROC(
INDICATOR ,1 ,% ) ,21 ) ) ) /
( (21 *
Sum( Pwr( ROC( INDICATOR ,1 ,% ) ,2 )
,21 )) - Pwr( Sum( ROC( INDICATOR ,1 ,%
) ,21 ) ,2 ))
|
**Beta is a
measure of volatility of one security against
another. This is typically used to measure the
volatility of a stock against an index like the
S&P 500. A value greater than one indicates
the stock is more volatile than the index. |
