Price Risk

The term price risk expresses the possibility of a temporary depreciation of the investment value because of price fluctuations.

Statistical risk coefficients such as volatility and β are used to measure price risk. It can be expressed better mathematically than the other risk kinds.


In the short and medium term, price risk outweighs the other risks; however, it becomes less important as the duration of an investment grows.


It is often confused with default risk because both are expressed by an unexpected depreciation of asset values.


Nevertheless, the consequences for the long-term investor are very different:

  • With default risk, possible problems with value creation could have very serious consequences for long-term assessment
  • Price risk changes basically nothing with regard to the long-term prospects of an investment