A proposed scale for assessing the investment risk

Abstract EN

In the context of trade-off between return and risk, the investment decision makers need to measure risks using various measures, the researcher found weaknesses in using some traditional measures and their lack of objectivity in measuring real risks, which prompted him to propose a new scale for assessing and measuring risks.

the researcher described the proposed scale, explained its mechanism of action, and experimented it through ten virtual cases.

the results of testing the scale showed that there were significant differences between the proposed scale and the traditional comparative measures such as the standard deviation and the coefficient of variance, which showed that the proposed scale was more objective in assessing and measuring risks and demonstrating the real concept of risk.

the researcher also tested the ability of the scales to distinguish between the studied cases and assess the degree of risk for each of them using the relative interquartile deviation, where the proposed scale outperformed the other measures, as the value of the relative interquartile deviation of the proposed scale was %118.31, while it was %3.13 for the standard deviation and %3.22 for the coefficient of variation.