Definition

Risk-adjusted

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Risk-adjusted return is typically defined as the return provided by an asset in excess of a benchmark with the same risk factor. For example, if crude oil is a benchmark for measuring the performance of oil stocks and it provides 10 per cent return on YTD basis, and an oil-related stock provides 12 per cent return on YTD basis, the remaining 2 per cent return would be the risk-adjusted return provided that the oil-stock and crude oil contains similar quantifiable risk factors.

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