downside risk


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Downside risk

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.

Downside

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.

downside risk

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.

downside risk

the 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.
References in periodicals archive ?
The growing aversion to taking on downside risk could lead practices to simply stay in fee for service and simply take the payment penalty because it is a fixed amount that can be planned for, as opposed to the fluctuations of bonuses and penalties that comes with a rapidly changing APM environment, Dr.
In the fourth section, we summarize known results and apply them to establish that the substitution effect of an increase in downside risk on the choice of an optimal control reduces the degree of absolute downside risk aversion as measured by the Schwarzian.
Uwaleke said that the target would not be achievable following downside risks such as election spending and implementation of minimum wage.
(2010) investigated relationship between risk and return in a downside risk framework and in a regular risk framework for stocks traded on The London and Paris Stock Exchanges and gave advantage to downside risk measures because they explained better mean returns than regular risk measures, Momcilovic et al.
We also note strong downside risk from other fields, such as the Tyra fields.
And there is downside risk in Next Generation, but there's downside risk, and you can choose the percentage of downside risk, much as in track 3 of MSSP.
The IMF said Thursday that "greater difficulties in China's transition to a new growth model, as illustrated by the recent financial market turbulence," are another downside risk to the global economy.
"The numbers show that Egypt's recovery remains weak and vulnerable to downside risk," senior economist at HSBC Razan Nasser said.
"The further slowing of trade, expected in 2012, shows that the downside risks remain high.
Then we propose our assumptions, propose a model with a downside risk constraint, and report the equilibrium strategies.
The intuitive explanation of this interesting result is that the higher income of all parents lowers the downside risk (f) in human capital investment for each parent, which encourages a transfer of resources from a low-return, low-risk investment in girls to a higher-return, low-downside-risk investment in boys; i.e., if downside risks of stocks are lowered, people transfer money from bonds to stocks.
However, the possibility of a worsening of the economic turmoil in Europe constitutes an important downside risk for oil-importing MENA countries.Europe is their main trading partner, absorbing about half of all exports.