Definition
Small-cap stocks are shares of companies with relatively small market capitalizations, typically between $300 million and $2 billion. These companies are generally younger, less established, and have more growth potential but also higher risk than larger companies. Small-caps tend to be more volatile, less liquid, and have less analyst coverage. Historically, small-caps have outperformed large-caps over long periods (small-cap premium), though with significantly higher volatility. The Russell 2000 is the primary small-cap index.
Formula
Example
A small-cap biotech company might have breakthrough potential but also high failure risk. Small-cap indexes often lead coming out of recessions as risk appetite returns, but lag during uncertain times.
FAQ
What is Small-Cap?
Companies with market capitalization typically between $300 million and $2 billion.
How do you calculate Small-Cap?
A common formula for Small-Cap is: 市值 = 股价 x 流通股数
Why is Small-Cap important?
Small-Cap helps investors evaluate industry terms and make more informed decisions.