Alpha
Alpha is a performance metric that measures how much a stock or portfolio has outperformed or underperformed its benchmark index, such as the Nifty50. A positive alpha indicates the asset has generated returns greater than the benchmark, while a negative alpha shows it has underperformed. It is often used to assess the effectiveness of a fund manager's decisions and investment strategies. For example, if a mutual fund has an alpha of +2, it means the fund has outperformed its benchmark by 2%. Alpha helps investors gauge whether the excess return is due to skill or merely market conditions.
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