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The Economic Times

Personal Finance / The Economic Times

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Beyond standard deviation: skewness, kurtosis matter

Standard deviation, while common, inadequately captures investment risk due to its equal treatment of gains and losses and assumption of symmetry. Skewness and kurtosis offer crucial insights, revealing the asymmetry and frequency of extreme returns. Combining these measures provides a more comprehensive understanding of potential upside and downside, enabling better risk management.

23 Feb 2026 6:30 am