Discussing the stock, page-7

That's pretty funny Auto ... the inverse correlation of salary to stock price. Just as amusing is portfolio management and AKK in the same sentence.

Likewise would be the calculation of beta for AKK using S&P 500 Index as the denominator in the covariance calculation. Again just trying to make a point about rational/irrational

Perhaps those with lots of time on their hands could come up with a homegrown beta (maybe a composite index of salary, amigo posts, moderated content, etc)

@dante941 if you want to "all" that's involved in calculating an individual stock beta is the closing price of the stock and the closing price of an index (pick a suitable one) over a period of time (5 years is popular as if too long the company has "changed"). Then calculate the % change both both. And the simply (aka Excel) calculate the covariance of (stock % change,index % change) / variance (index % change) and that's it. You have your beta coefficient.

In portfolio mgmt, you might you this beta to help figure out whether stock B should replace stock A in your portfolio to reduce its overall risk.

Conceptually, if you had designed a "portfolio" of non-performing stocks, and had an index of the universe of non-performing stocks, then figuring out the beta for AKK may help in substituting say AKK for XXX to reduce the risk of portfolio of non performing stocks.

I think that's what Auto was getting at with beta and portfolio mgmt and why for that purpose it is not that much use given the tools available.

Beta has other (practical) uses too.
Rule #1 of course know its meaning.
Rule #2 is know its context
Rule #3 is does that apply to what you are doing (e.g. AKK and S&P 500 don't belong in same sentence).

Have "fun" and surely that covers the subject in theory and some practice.