Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.
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Value at Risk is a loss threshold for a portfolio over a set horizon, estimated so that losses are expected to exceed it only with a small stated probability, such as 5%. A 95% one-day VaR of HK$20,000, for example, means a loss larger than HK$20,000 is expected on about 1 day in 20 under the model's assumptions.
Volatility measures how widely an asset's returns vary around their average, most often as the standard deviation of returns, usually quoted as an annualized percentage. Higher volatility means larger price swings in both directions, not a particular direction.