RISK ADJUSTED RETURN Definition

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RISK ADJUSTED RETURN is when we subtract from the rate of return on an asset a rate of return from another asset that has similar risk. This gives an abnormal rate of return that shows how the asset performed over and above a benchmark asset with the same risk. We can also use the beta against the benchmark to calculate an alpha which is also risk adjusted performance.

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UNSYSTEMATIC RISK, in securities, is price fluctuations resulting from the unique characteristics of specific securities. Unsys­tematic risk generally is eliminated in a well diversified portfolio. Also known as non-systematic risk.

ANALYSIS CODES, in accounting, represent software driven analysis methods which are independent of the normal grouping of account codes. An analysis code allows management to collect and monitor income and expenditure for a particular function or event that is not captured by the use of a project code or class, i.e. allows for much finer segmentation.

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