Appraisal Ratio

Can anyone explain the intuition behind the calculation of unsystematic risk? If you are trying to isolate non-market risk, are we multiplying the standard deviation of the market by portfolio Y’s beta to isolate the volatility of portfolio Y?

Did I just answer/solve my own question…?


Beta is the ratio of how much systematic riska stock has relative the the market risk.
Beta = Systematic Risk of stock / Market risk.

Systematic Risk of stock = Beta x Market risk.
= 1.4 x 0.12 = 0.168