Potential Upside

Potential Upside is the amount of upward price movement an investor or an analyst expects of a particular equity instrument.

Potential Upside




Unlike using an educated guess on how high a stock could go calculate potential upside as the greater the potential dollar or percentage rise, the bigger the upside for the investment. Potential Upside is the reciprocal of the Value At Risk measure and can be interpreted as return on an investment relative to minimal acceptable return.

Potential Upside In A Nutshell

First, a way to help determine upside potential would be to implement a price target. Now with a price target, there are many different ways to determine this number as there is no set way to calculate that number. Secondly, take a look at the technical analysis on the chart and see where the current support and resistance levels sit. Lastly, integrate the fundamental analysis and technical analysis to formulate your upside potential. There is no one set way to do this, but it is important to establish a realistic number to maybe take profit and move it into another asset because not all companies and products will increase for long periods of time. Diversification is a key aspect to any portfolio.

As simple as the title says, the potential upside is how much further you believe a stock or other asset is going to increase. There are many different ways to calculate this and decide on how much potential there is to the upside, so we will go over several. It may be easy to decide a company will grow and increase in stock value, but how much or how far is a little trickier.

Closer Look at Potential Upside

When using potential upside, there will not be a set number to compare too, but you can gather what may experts and analysts are coming up with to gauge on whether you are in the ball park. Also, the upside potential can be affected by news that is coming up and is always subject to change. Provided nothing catastrophic is hitting the wire, it would be a good idea to find the upside potential and recalculate it semi annually, that way you stay relevant with the current market. If you get stuck are need some help, the internet is a great place to search and if you have the option, join an investing community and bounce ideas off of them as everyone is usually willing to give you advice.