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Risk includes the chance that a security increases or decreases in value unexpectedly. However, most people are concerned with the chance of an unexpected decline - which is known as downside risk.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
In technical analysis and fundamental analysis, an estimate of the potential percentage or dollar amount by which a security may fall in the near-term. There are various methodologies used to determine an upside. For example, an analyst may look at recent trends on a bank stock and believe that it has the potential to fall in value by 15% in the next few weeks. This might be an indication for investors to sell the stock. Downside is also known as downside risk. See also: Upside Potential.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The potential losses that may occur if a particular investment position is taken. For example, the downside risk from holding Treasury bills is quite small. Compare upside potential.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
downside riskthe risk of experiencing losses associated with an investment project and the magnitude of these losses. Managers' attitudes towards UNCERTAINTY will influence their assessment of the desirability of a project which has substantial downside risk.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson