<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Want to participate in a short research study? Help us shape the future of investment tools and get a chance to win a $ 250 gift card!"data-reactid =" 27 ">Do you want to participate in a short research study? Help us shape the future of investment tools and get a chance to win a $ 250 gift card!

<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you are interested in Telecom Service One Holdings Limited (HKG: 3997), you may want to review its beta (measure of stock price volatility) to understand the impact the stock might have on your portfolio. Modern financial theory views volatility as a measure of risk. There are two main types of price volatility. First, we have company-specific volatility, which is the price movement of a particular security. Holding at least 8 stocks can reduce this type of risk in a portfolio. The other type, which can not be diversified, is the volatility of the entire market. Each market share is exposed to this volatility, linked to the fact that stock prices are correlated in an efficient market. "Data-reactid =" 28 "> If you are interested in Telecom Service One Holdings Limited (HKG: 3997), you can consider its beta (measuring the volatility of stock prices) in order to understand the impact that the stock The modern financial theory sees volatility as a measure of risk.First we have the company-specific volatility, which is the price movements of an individual stock. The other type, which can not be diversified, is the volatility of all stocks in the market is exposed to this volatility, which is linked to the fact that prices equities are correlated in an efficient market.

Some stocks closely mimic market volatility, while others have moderate, exaggerated or uncorrelated price movements. Beta is a widely used measure of a stock's exposure to market risk (volatility). Before proceeding, it should be noted that Warren Buffett pointed out in his 2014 letter to shareholders that "volatility is far from being risky". That said, beta can still be quite useful. The first thing to understand about beta is that market beta is one of them. A stock whose beta is less than one is less volatile than the market, is more volatile but not correlated to the market in general. In comparison, a stock with a beta greater than 1 tends to move in the same direction as the market in the long run, but with larger price changes.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " See our latest analysis for Telecom Service One Holdings "data-reactid =" 30 "> See our latest analysis for Telecom Service One Holdings

What we can learn from the beta value of 3997

Given that its beta is 1.55, we can assume that the price of the Telecom Service One Holdings action has been quite sensitive to the volatility of the market (over the past 5 years). If this beta value holds true in the future, Telecom Service One Holdings shares will likely increase more than the market as the market rises, but decline more rapidly as the market declines. Stock price volatility is worth considering, but most long-term investors believe the story of earnings growth and earnings growth is more important. Take a look at the results of Telecom Service One Holdings in this regard, below.

SEHK: 3997 Profit and Loss Account Export 10 February 19

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Does the size of 3997 affect the expected beta?

Telecom Service One Holdings is a rather small company. It has a market capitalization of HK $ 359 million, which means it's probably under the radar of most investors. It takes less money to influence the share price of a very small company. This may explain the excessive volatility induced by this beta value.

What does this mean for you?

Beta only tells us that the Telecom Service One Holdings share price is sensitive to market fluctuations. This could indicate that it is a business with high growth or strongly influenced by sentiment because it is speculative. Alternatively, it could have an operational leverage in its business model. In the end, beta is an interesting metric, but there is still a lot to learn. The purpose of this article is to inform investors about beta values, but it is also important to consider important company-specific fundamentals, such as the financial performance and financial health of Telecom Service One Holdings. I urge you to continue your research by examining the following:

  1. Future prospects: What do well-informed industry analysts predict for the future growth of 3997? Check out our free research report on analyst consensus regarding the outlook for 3997.
  2. antecedents: 3997 has he always been successful regardless of the ups and downs of the market? Go into more detail in the past performance analysis and look at the free visual representations of the 3997 histories for clarity.
  3. Other interesting actions: It is useful to check how 3997 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 actions mentioned. For errors that need to be corrected, please contact the publisher at the address editorial-team@simplywallst.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 based solely on fundamental data. account of the latest price sensitive business announcements.

The author is an independent contributor and, at the time of publication, was not positioned in the actions mentioned. For errors that need to be corrected, please contact the publisher at editorial-team@simplywallst.com.