You can see Brilliance China Automotive Holdings's revenue and earnings in the image below. Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. If this beta value holds true in the future, Brilliance China Automotive Holdings shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. Zooming in on Brilliance China Automotive Holdings, we see it has a five year beta of 1.97. Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!Ĭheck out our latest analysis for Brilliance China Automotive Holdings What does 1114's beta value mean to investors? Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market. To use beta as an investor, you must first understand that the overall market has a beta of one. So, while useful, beta is not the only metric to consider. However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). Some stocks are more sensitive to general market forces than others. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The first type is company specific volatility. Investors may think of volatility as falling into two main categories. Volatility is considered to be a measure of risk in modern finance theory. If you're interested in Brilliance China Automotive Holdings Limited ( HKG:1114), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio.
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