Is China Yongda Automobiles Services Holdings Limited (HKG:3669) A Volatile Stock?
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If you own shares in China Yongda Automobiles Services Holdings Limited (HKG:3669) then it’s worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. 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. Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that ‘Volatility is far from synonymous with risk’, beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is 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.
See our latest analysis for China Yongda Automobiles Services Holdings
What does 3669’s beta value mean to investors?
Given that it has a beta of 1.58, we can surmise that the China Yongda Automobiles Services Holdings share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that China Yongda Automobiles Services Holdings are likely to rise strongly in times of greed, but sell off in times of fear. Beta is worth considering, but it’s also important to consider whether China Yongda Automobiles Services Holdings is growing earnings and revenue. You can take a look for yourself, below.
Could 3669’s size cause it to be more volatile?
China Yongda Automobiles Services Holdings is a small cap stock with a market capitalisation of HK$9.9b. Most companies this size are actively traded. It is quite common to see a small-cap stock with a beta greater than one. In part, that’s because relatively few investors can influence the price of a smaller company, compared to a large company.
What this means for you:
Since China Yongda Automobiles Services Holdings tends to moves up when the market is going up, and down when it’s going down, potential investors may wish to reflect on the overall market, when considering the stock. This article aims to educate investors about beta values, but it’s well worth looking at important company-specific fundamentals such as China Yongda Automobiles Services Holdings’s financial health and performance track record. I urge you to continue your research by taking a look at the following:
Future Outlook: What are well-informed industry analysts predicting for 3669’s future growth? Take a look at our free research report of analyst consensus for 3669’s outlook.
Past Track Record: Has 3669 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 3669’s historicals for more clarity.
Other Interesting Stocks: It’s worth checking to see how 3669 measures up against other companies on valuation. You could start with this free list of prospective options.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
