Beta measures a stock’s volatility, the degree to which its price fluctuates in relation to the S&P 500. In other words, it gives a sense of the stock’s market risk compared to the greater market. The key word here is “compared”. Beta is used also to compare a stock’s market risk to that of other stocks. Analysts use the Greek letter ‘ß’ to represent beta.
A beta of 1 means that the stock’s price tends to move with the broader market. A beta greater than 1 indicates that the security’s price tends to be more volatile than the market, and a beta less than 1 means it tends to be less volatile than the market. Many utility stocks have a beta of less than 1, and, conversely, many aggressive growth stocks have a beta greater than 1. Here is a basic rundown of what the various beta ranges mean:
Beta of 0 – Cash has a beta of 0. In other words, regardless of which way the market moves, the value of cash remains unchanged (with the assumption of no inflation).
Beta between 0 and 1 – Companies with volatilities lower than the market have a beta of less than 1 (but more than 0). Many utilities fall in this range.
Beta of 1 – A beta of 1 represents the volatility of the given index used to represent the overall market, against which other stocks and their betas are measured. The S&P 500 is such an index. If a stock has a beta of one, it will move the same amount and direction as the index. So, an index fund that mirrors the S&P 500 will have a beta close to 1.
Beta greater than 1 – This denotes a volatility that is greater than the broad-based index. Again, as we mentioned above, many technology companies on the Nasdaq have a beta higher than 1.
XOMA Corp (NASDAQ:XOMA) has beta value of 3.46. The company has the market capitalization of $162.78M. Return on assets ratio of the company was -69.40% while its return on equity ratio was 301.10%. ATR value of company was 0.17 while stock volatility for week was 6.31% while for month was 14.34%.
Canadian Solar Inc. (NASDAQ:CSIQ) is currently valued at $1.24B. The company has 55.70M shares outstanding and 53% shares of the company were owned by institutional investors. The company has price to book ratio was recorded as 1.63. The company earned 185.30M in prior twelve months on revenue of $3.30B. It beta stands at 3.12.
Century Aluminum Co (NASDAQ:CENX) has the market capitalization of $ 346.86M while 86.94M shares were outstanding. Beta factor, which measures the riskiness of the security, was recorded as 1.80. In the trailing twelve months, net profit margin of the company was 1.80% while gross profit margin was 7.10%.
Lattice Semiconductor (NASDAQ:LSCC) has market value of $ 707.43M while its EPS was booked as -0.84 in the last 12 months. The stock has 117.90M shares outstanding while 97% shares of the company were owned by institutional investors. Beta value of the company was 1.85; beta is used to measure riskiness of the security.
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