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Finance GlossaryUnsystematic Risk
Unsystematic Risk
Definition of Unsystematic Risk
Unsystematic risk is the risk specific to a company or industry and not the overall market. It includes factors such as management decisions, labour strikes, or product failures. For example, a lawsuit affecting only one pharmaceutical company represents unsystematic risk and can be reduced through diversification.
Related Terms
Index Futures
Index futures are derivative instruments that track an underlying sectoral, thematic, or benchmark index like Nifty Bank, Finnifty, Nifty 50, and others. While trading index futures, a trader avoids individual share risk by trading an entire index.
Bureau Of Indian Standards
Bureau Of Indian Standards (BIS) is responsible for standardizing and certifying goods and services from third parties so that the end consumer knows that the products are safe and reliable.
BIS was established in 1986 and was rebranded from the Indian Standards Institution (ISI) to BIS during the year to adapt to the changing product landscape of India.
BIS was established in 1986 and was rebranded from the Indian Standards Institution (ISI) to BIS during the year to adapt to the changing product landscape of India.
Rights Issue
A rights issue is a common type of corporate action. When rights are issued, the existing shareholders of a company get the option to buy additional shares at a discounted price. In the process, the company raises fresh capital that it uses for different purposes. Some of the common uses of issuing rights include capital for expansion, reducing debt, or creating a working capital. Shareholders have the option to subscribe, ignore, or sell their rights, depending on the structure of the issue.
Basis Trading
Basis trading means futures trading strategies that use the difference between the spot price and the futures contract price of a stock or commodity.
The difference between the spot and futures prices forms the “basis” for the trading strategy. Hence the name basis trading. These are the two ways in which a trader may use the basis:
The difference between the spot and futures prices forms the “basis” for the trading strategy. Hence the name basis trading. These are the two ways in which a trader may use the basis:
- Short the basis : Done if the price difference or basis is expected to reduce
- Long the basis :Done if the price difference or basis is expected to increase
Nifty 50
Nifty 50 is a key stock market index made of the 50 largest companies by market cap listed on the National Stock Exchange (NSE) in India. It serves as an indicator of overall market movement and helps investors understand how the broader Indian equity market is performing.
Positional Trading
Positional Trading is a trading strategy where a trader keeps their position (long or short) for weeks to months. Unlike intraday trading or swing trading, positional traders do not pay attention to minor price fluctuations and focus on fundamental analysis, economic trends, and long-term technical patterns to predict the overall direction of a security. This strategy is less time-intensive and is often preferred by traders who are looking to capture major moves in the market with lower transaction costs.
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