The article introduces a new model that connects specific company traits to changes in risk and expected returns over time. By analyzing a large dataset of individual stocks, the model accurately predicts returns and risks based on firm characteristics. The study shows a clear relationship between risk and return for stocks. Compared to a widely used model, the new model significantly improves the accuracy of predicting stock returns based on factors like size, book-to-market ratio, and momentum. Overall, firm characteristics, especially through the new model, play a crucial role in explaining why some stocks perform better than others.