In investing, upside risk is the uncertain possibility of gain.
An alternative measure of upside risk is the upper semi-deviation.
Upside risk is calculated using data only from days when the benchmark (for example S&P 500 Index) has gone up.
The comparison of upside to downside risk is necessary because “modern portfolio theory measures risk in terms of standard deviation of asset returns, which treats both positive and negative deviations from expected returns as risk.”[1] In other words, regular beta measures both upside and downside risk.
In reality, they are seldom the same, and making the distinction between upside and downside risk is necessary and important.