Alpha

Alpha is the return a strategy earns above its benchmark — the value added (or destroyed) versus simply holding the index.

Alpha is performance relative to a benchmark. If the Nifty 50 returned 11% and your strategy returned 15% over the same period, its alpha is roughly +4 points — the part not explained by just owning the market. Negative alpha means you would have done better, and with less effort, by buying the index.

Alpha is only meaningful after costs and taxes and against an honest benchmark. A strategy that beats the index on paper but trails it after transaction costs has no alpha worth having.

Definitions are educational and consistent with Thuztra’s backtest methodology. Backtests are research, not investment advice; past performance does not predict future results.