Sharpe Ratio
A measure of how much return an investment earns for each unit of risk (volatility) it takes on.
What it is
The Sharpe Ratio, developed by Nobel laureate William Sharpe, measures risk-adjusted return. It takes the return earned above a safe, risk-free benchmark (like a Treasury bill) and divides it by how volatile those returns were. The result tells you how efficiently an investment converts risk into reward.
Why it matters
It lets you compare investments on a level playing field, since a high return achieved with wild swings may be worse than a steadier, lower return. Pitfalls: it assumes returns are roughly bell-shaped and penalizes upside volatility the same as downside, so it can flatter strategies that are calm until they blow up.
How it's calculated
Subtract the risk-free rate from the investment's return to get the excess return, then divide that by the standard deviation (volatility) of the investment's returns.
How Quintarthai uses it
Risk and volatility metrics are available across the screener and company pages, where you can compare names on a risk-adjusted basis; start on the app.