What is "Beta"?

A stock with a beta of 1.0 is exactly as volatile as its benchmark, typically the S&P 500. So if the S&P 500 rises by 20%, a stock with a beta of 2.0 should rise 40% ... and vice versa. That would seem to make high-beta stocks a bad thing to hold when the market is declining, but a great thing to load up on as the market turns. And indeed, some investors pursue exactly this strategy as a way to juice their portfolio in anticipation of an upturn.

Proceed with caution. While high-beta stocks should theoretically rise further in an upswing, there are a few caveats to consider.

One, of course, is that beta is a measure of what the stock has done in the past, and we know that's an imperfect gauge of the future. But the second reason for caution is somewhat more complicated. Because a stock's beta actually describes a combination of its volatility and correlation to the market, the figure may give misleading information.

For instance, just because a stock has a beta of 0, that doesn't mean its price never moves -- it just means its movements have no correlation to the market. It could be very tame or incredibly volatile, but whether its gyrations were wild or docile, they would bear no relationship to the movement of the index it's compared with.

http://www.fool.com/investing/high-growth/2008/10/31/want-the-highest-growth.aspx