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  1. Avatar of blackpaddy says

    I hope i’m corrrect when i add that they are thesame. Use of the two terms arises when comparing risk of one sector (e.g petroleum) against that of the market as a whole.
    somebody please correct me if i am wrong.

      • Avatar of yelen says

        @kateker,
        Beta is systematic risk divided by market risk. In the example 2 systematic risk is 8%, market risk is 10%
        So they are not the same..

      • Avatar of kateker says

        @yelen, In this context, the systematic risk is the individual company’s risk, and the market risk refers to the whole companies’s risk in the stock exchange.

        The difference is only about the amount but nature is the same.

      • Avatar of johnmoffat says

        @kateker, You are correct that the nature is the same, but be careful about the wording.
        “Market risk” is the risk of the stock exchange as a whole (i.e. the average of the risks of all shares on the stock exchange).
        The “systematic risk” of a particular share is that risk due to general economic factors (and risk due to factors peculiar to the company – “unsystematic risk” is ignored on the assumption shareholders have well-diversified portfolios.

        (The risk of the market as a whole is only systematic because the market as a whole is perfectly well diversified).

        Some shares have higher systematic risk than the market, and some have less. The risk of the market is the average of all of them.

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