Upside/Downside Ratio

What is it? The ratio of the potential return on a stock to the potential loss. Using earnings estimates and historic p/e data, analysts first determine a target price for a stock. They also estimate the potential downside, or how low a stocks price could fall if circumstances change. The difference between a stocks current price and its target price is the potential gain and the difference between the current price and its potential low represents the risk of loss.

Added By: Aiden

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