Risk ratio

Some investors and financial analysts try to estimate the risk an investment poses by speculating on how much the investment is likely to increase in value as opposed to how much it could decline.

For example, a stock priced at $50 that analysts think could increase to $90 or decrease to $30 has a 4:2 risk ratio, because they estimate the stock could go up $40 but down $20.

Critics point out that it is impossible to provide an accurate estimate of future prices, rendering risk ratios meaningless.

(… RAY-shee-oh) A measure of the risk of a certain event happening in one group compared to the risk of the same event happening in another group. In cancer research, risk ratios are used in prospective (forward looking) studies, such as cohort studies and clinical trials. A risk ratio of one means there is no difference between two groups in terms of their risk of cancer, based on whether or not they were exposed to a certain substance or factor, or how they responded to two treatments being compared. A risk ratio of greater than one or of less than one usually means that being exposed to a certain substance or factor either increases (risk ratio greater than one) or decreases (risk ratio less than one) the risk of cancer, or that the treatments being compared do not have the same effects. Also called relative risk.