How Paradise Entertainment Limited (HKG: 1180) Can Affect the Volatility of Your Portfolio

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<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 receive a $ 20 prize!"data-reactid =" 27 ">Do you want to participate in a short research study? Help us shape the future of investment tools and receive a $ 20 prize!

<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If you are interested in Paradise Entertainment Limited,HKG: 1180), 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 Paradise Entertainment Limited (HKG: 1180) Then you might 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. 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 Paradise Entertainment "data-reactid =" 30 "> Check out our latest analysis for Paradise Entertainment

What does the 1180 beta value mean for investors?

Given that its beta is 1.26, we can assume that the Paradise Entertainment stock price has been quite sensitive to market volatility (over the past 5 years). Based on this story, investors should be aware that Paradise Entertainment will likely increase sharply in times of greed, but will sell in times of fear. The beta is worth considering, but it is also important to determine whether Paradise Entertainment is increasing revenue and revenue. You can take a look for yourself, below.

SEHK: Income Statement 1180 Export 19 February 19

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Could the size of 1180 be more volatile?

Paradise Entertainment is a rather small company. It has a market capitalization of 905 million HK, which means that it is 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 Paradise Entertainment stock price is sensitive to wider market movements. 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 important fundamental principles of a company, such as financial health and performance performance, should also be considered. I strongly recommend that you dive deeper by considering the following points:

The story continues

  1. Financial health: Are the 1180 operations 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.
  2. antecedents: Did 1180 always perform well regardless 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 the 1180's for clarity.
  3. 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 = "Our goal is to provide you with a long-term research analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive business announcements or qualitative information.

If you notice an error that can be corrected, please contact the publisher at editorial-team@simplywallst.com. This article from Simply Wall St is of a general nature. This is done do not constitute a recommendation to buy or sell shares, and does not take into account your objectives or your financial situation. Simply Wall St has no position on the actions mentioned. On rare occasions, data errors may occur. Thanks for the reading.

"data-reactid =" 57 "> Our goal is to provide you with a long-term research analysis based on fundamental data.Please note that our analysis may not take into account the latest announcements of price sensitive companies or qualitative information.

If you notice an error that needs to be corrected, please contact the publisher at editorial-team@simplywallst.com. This article from Simply Wall St is of a general nature. This is done do not constitute a recommendation to buy or sell shares, and does not take into account your objectives or your financial situation. Simply Wall St has no position on the actions mentioned. On rare occasions, data errors may occur. Thanks for the reading.