alpha tells how your portfolio is giving return ...
each fund will have benchmark index ...
example is a stock name is A and return/profit : 7.4%
benchmark index is BSP500 and return/profit : 6.4%
alpha is comparison of returns of stock A to benchmark index BSP500.
it show how markets perform and how your selected stock given the return. so alpha is 1( 7.4 - 6.4)
beta is comparison of volatility and risk factor .it value is (less than 1, 1, and greater than 1)
less than 1 means less volatile and less risk but less return
1: it is equal to market , so returns are equal to markets
greater than , more volatile and more risk but higher return.
before choosing stocks we should take both alpha , beta and other three factors likestandard deviation, R-squared and the Sharpe ratio. i am working as a portfolio advisor for past 3 years in bank. i am coding in python to predict the stocks with ML. i am guide you correctly.