Hi TF, As you can see in the definitions, one rank is based upon what we term "amplitude" of price change on a weekly basis (standard deviation). It doesn't matter if the rest of the market is steady or volatile. So, this is a measure of volatility centered upon the stock's own price, not the market.
With BETA we're looking at how well the stock correlates with the markets. Then we're looking at what multiple of market correlation we see. With BETA we could have the same volatility with a negatively correlated stock as with a positively correlated stock.
As the example shows, a 1.50 BETA moves in the same direction as the general NYSE, but at a pace of 50% greater moves. So, if the NYSE was up 1% on week, the stock, in theory, would be up 1.5% that same week.
Now, we could have a stock with a 0.667 BETA and it could have about the same volatility as the 1.50 stock. Its movement would be about 1.5 times the NYSE weekly move, but in the opposite direction. One stock correlates "positively" and the other "negatively" with the NYSE.
The lower the "Stability" number, the more volatility you should expect - no matter which way the market is going. As far as Personality Traits go, a very low stability number usually is quite compatible with AIM. Two stocks in the same industry that have about the same measurable fundamentals might be reviewed. Let's say one has a "30" Stock Price Stability and the other has "5." The "5" would be the better choice if no other differences could be found.
Another point might be that the lower the Price Stability value, the higher the Cash Reserve max levels should be allowed to rise. All that instability won't do us any good if we don't have the cash to buy all the deep dips. It might also be a clue as to how often one should actually make purchases.
Best regards, Tom
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