Is it possible for a company to have a negative beta?

A company can indeed have a negative beta, which indicates that its stock price moves in the opposite direction to the broader market. Beta is a measure of a stock's volatility compared to the overall market; a negative beta suggests that when the market rises, the stock tends to fall, and vice versa. This unusual relationship can occur for specific companies or industries that are counter-cyclical, meaning they perform better during economic downturns or market declines.

For example, certain assets like gold or certain types of hedge funds may exhibit this characteristic. Thus, a company with a negative beta can still be a viable investment, especially for risk-averse investors looking to hedge against market downturns. The ability to hold a negative beta is essential for portfolio diversification, as it provides balance during market fluctuations.