【the braces place lowell ma】How Karoon Energy Ltd (ASX:KAR) Can Impact Your Portfolio Volatility
Anyone researching Karoon Energy Ltd (
ASX:KAR
) might want to consider the historical volatility of the share price. Volatility is the braces place lowell maconsidered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. The first category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. The second sort is caused by the natural volatility of markets, overall. For example, certain macroeconomic events will impact (virtually) all stocks on the market.
Some stocks see their prices move in concert with the market. Others tend towards stronger, gentler or unrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said ‘volatility is far from synonymous with risk’ in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. 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.
Check out our latest analysis for Karoon Energy
What KAR’s beta value tells investors
Zooming in on Karoon Energy, we see it has a five year beta of 1.22. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market the market. If this beta value holds true in the future, Karoon Energy shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Karoon Energy fares in that regard, below.
ASX:KAR Income Statement, March 1st 2019
How does KAR’s size impact its beta?
Karoon Energy is a noticeably small company, with a market capitalisation of AU$276m. Most companies this size are not always actively traded. It takes less money to influence the share price of a very small company. This may explain the excess volatility implied by this beta value.
What this means for you:
Beta only tells us that the Karoon Energy share price is sensitive to broader market movements. This could indicate that it is a high growth company, or is heavily influenced by sentiment because it is speculative. Alternatively, it could have operating leverage in its business model. Ultimately, beta is an interesting metric, but there’s plenty more to learn. In order to fully understand whether KAR is a good investment for you, we also need to consider important company-specific fundamentals such as Karoon Energy’s financial health and performance track record. I highly recommend you dive deeper by considering the following:
Story continues
Future Outlook
: What are well-informed industry analysts predicting for KAR’s future growth? Take a look at our
free research report of analyst consensus
for KAR’s outlook.
Past Track Record
: Has KAR been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at
the free visual representations of KAR’s historicals
for more clarity.
Other Interesting Stocks
: It’s worth checking to see how KAR measures up against other companies on valuation. You could start with this
free list of prospective options
.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at
. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
View comments
(责任编辑:Entertainment)
- Deutsche (DB) Ratings Affirmed by Moody's, Outlook Upgraded
- Natural Gas Price Fundamental Daily Forecast – Crushed by ‘Exceptionally Comfortable’ Temps Ahead of EIA Data
- Realogy Holdings Corp.'s (NYSE:RLGY) Intrinsic Value Is Potentially 88% Above Its Share Price
- Global Flavored Water 2019 - Key Insights and Drivers Behind the Flavored Water Market Performance
- Role of Wireless ICT in Healthcare Markets, 2020 Report - Focus on WICT and M2M Communications, Self-powered Wireless Sensors, Underlying Technologies, & WBAN/WMBAN Features and Standardization
- Wall Street Week Ahead: Bond investors look for Fed to justify steepening yield curve
- 1.9 Million Unemployment Claims; Travel Bets Surge
- Peak Announces Initiation of Research Coverage by eResearch
- The Wizz Air Holdings (LON:WIZZ) Share Price Has Gained 160%, So Why Not Pay It Some Attention?
- Why SkiStar AB (publ)'s (STO:SKIS B) High P/E Ratio Isn't Necessarily A Bad Thing
- Memgen Announces Addition to Board of Directors
- Bioreactors Market Research Report by Material, by Usage, by Scale, by Control Type, by Distrbution - Global Forecast to 2025 - Cumulative Impact of COVID-19
- Meritor to Cut Global Salaried Workers on Coronavirus Scare
- ATIF Holdings Limited Secures Consulting Agreement with Qudrant Creation Inc., Aggregated Agreements Signed Totaled to $4 Million in October 2020
- Violet Defense Awarded DIU Subcontract for Prototype of Ruggedized UV Disinfection Product
- FINAL DEADLINE TODAY: The Schall Law Firm Announces the Filing of a Class Action Lawsuit Against HDFC Bank Limited and Encourages Investors with Losses in Excess of $100,000 to Contact the Firm
- Culp: Q2 Earnings Insights
- Wisconsin Father Hits 500,000 Push-up Milestone on the Path to Break World Record
- Does Market Volatility Impact Axovant Gene Therapies Ltd.'s (NASDAQ:AXGT) Share Price?
- European Stocks Seen Higher; U.S. Election in Spotlight