Some stocks closely mimic market volatility, while others have moderate, exaggerated or uncorrelated price movements. Beta can be a useful tool for understanding how an equity is influenced by market risk (volatility). However, Warren Buffett said "volatility is far from being risky" in his 2014 letter to investors. Thus, although useful, the beta is not the only measure to take into account. To use the beta version as an investor, you must first understand that the market is endowed with a beta version. A stock whose beta is less than one is either less volatile than the market, or more volatile but not correlated to the market in general. In comparison, a stock whose beta is greater than one tends to move in the same direction as the market in the long run, but with larger price changes.
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What we can learn from the beta value of HESTERBIO
In the last five years, Hester Biosciences has a beta version of 0.90. The fact that it is well below 1 indicates that stock price fluctuations have not been historically very sensitive to overall market volatility. If history is a good guide, equity ownership should help you avoid your portfolio being too sensitive to market volatility. Many would argue that beta is useful for sizing positions, but that fundamental measures such as income and profits are more important in general. You can see the revenues and revenues of Hester Biosciences in the image below.
NSEI: HESTERBIO Export Profit and Loss Account 12 January 19
How does the size of HESTERBIO affect its beta?
Hester Biosciences is a small business. It has a market capitalization of ₹ 10, which means it's probably under the radar of most investors. Companies with market capitalizations close to this size often show a low correlation with the broader market because market volatility is overshadowed by company-specific events or other factors. It is useful to check the frequency with which shares are traded, as very small businesses with a very low beta value are often traded very little.
What does this mean for you?
Hester Biosciences is generally not very sensitive to the market in general. This could be for various reasons. Typically, small businesses have a low beta if their stock price tends to fluctuate a lot due to specific developments. Alternatively, a strong dividend payer could move less than the market because investors value it for its revenue stream. The purpose of this article is to inform investors about beta values, but important corporate fundamentals, such as the financial performance and financial health of Hester Biosciences, should also be considered. I strongly recommend that you dive deeper by considering the following points:
- Future prospects: What do well-informed industry analysts predict for HESTERBIO's future growth? Take a look at our free research report on analyst consensus regarding HESTERBIO's outlook.
- antecedents: Has HESTERBIO always been successful regardless of the ups and downs of the market? Go into more detail in past performance reviews and take a look at the free visual representations of HESTERBIO's history for clarity.
- Other interesting actions: It should be checked how HESTERBIO compares to other companies in terms of valuation. You can start with this free list of potential options.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest price sensitive business announcements.
The author is an independent contributor and, at the time of publication, was not positioned in the mentioned actions. For errors requiring correction, please contact the publisher at the address email@example.com.
"data-reactid =" 53 "> To help readers understand the short-term volatility of the financial market, we aim to provide you with a long-term research analysis focusing on fundamental data only. ignores the latest price sensitive business announcements.
The author is an independent contributor and, at the time of publication, was not positioned in the mentioned actions. For errors that need to be corrected, please contact the publisher at firstname.lastname@example.org.