how much a stock moves vs the market · Risk & quality — durability and the shape of the bet
How much a stock moves relative to the whole market. Beta 1.0 = moves with the market; 2.0 = twice as jumpy; 0.5 = half as jumpy.
Raw historical betas overshoot — extreme readings tend to drift back toward 1.0 over time — so the app shrinks them toward 1 for a more honest forward estimate.
CAPM is the model that converts beta into a required return: riskier stock → higher return demanded. The app uses it to set each company’s own DCF discount rate (8–12%), so a sleepy utility and a volatile chip stock aren’t discounted as if they were equally risky.
CAPM required return = risk-free rate + β × (market return − risk-free rate) app’s per-name discount rate = clamp( 8%…12%, 4.3% + β* × 4.7% ) β* = 0.33 + 0.67 × β (Blume shrink toward 1.0)