<p class = "canvas-canvas-text canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you are interested in Peel Mining Limited (ASX: PEX), you may want to review its beta (measure of stock price volatility) to understand the impact the stock might have on your portfolio. Volatility is considered a measure of risk in modern financial theory. Investors may think that volatility is divided into two main categories. 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 Peel Mining Limited (ASX: PEX) Next, you may want to examine its beta (measure the volatility of the stock price) to understand the impact that the stock could have on your portfolio.Volumility is considered a measure of risk in the theory of modern finance.The volatility specific to a company, which corresponds to the price fluctuations of an individual stock, is held by at least 8 stocks, which reduces this type of risk on a portfolio, the other type can not be diversified volatility of the whole market: each share of the market is exposed to this volatility, which is linked the fact that stock prices are correlated in an efficient market.
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 that "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. Any stock with a beta greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or weakly correlated with the market.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " See our latest analysis for Peel Mining "data-reactid =" 30 "> See our latest analysis for Peel Mining
What does the beta value of PEX say to investors
As a result, Peel Mining has a beta version of 0.99 over five years. This is close to 1, so the stock has always had a level of volatility similar to the market. Using history as a guide, it can be assumed that the stock price will likely be influenced by market volatility, but it is unlikely to be particularly sensitive to this trend. 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 income and profits of Peel Mining in the image below.
ASX: PEX Export Income Statement 12th February 19
Does the size of PEX influence the expected beta?
With a market capitalization of 103 million Australian dollars, Peel Mining is a very small company at the global level. It is very likely that it is unknown to most investors. Companies of this size are generally more volatile than the market, whether or not this volatility is correlated. Therefore, it is a little surprising to see that this stock has a beta value so close to the global market.
What does this mean for you?
Peel Mining has a beta value quite close to that of the overall market. It does not tell us much about it. It is therefore probably worth asking if the company is growing, if you are looking for stocks that will rise more than the market in general. The purpose of this article is to inform investors about beta values, but important corporate fundamentals such as the financial health and performance of Peel Mining should also be considered. I strongly recommend that you dive deeper by considering the following points:
- Financial health: Are PEX activities financially viable? Balance sheets can be difficult to analyze, which is why we have done it for you. Check out our financial health check here.
- antecedents: Has PEX always performed independently of the highs and lows of the market? Go into more detail in past performance reviews and take a look at the free visual representations of PEX logs for clarity.
- Other performing stocks: Are there other stocks offering better prospects with proven track records? Explore our free list of these large stocks here.
<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 firstname.lastname@example.org.
"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 email@example.com.