Does Izolacja Jarocin Spolka Akcyjna (WSE:IZO) Have A Particularly Volatile Share Price?

If you own shares in Izolacja Jarocin Spolka Akcyjna (WSE:IZO) 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 are more sensitive to general market forces than others. 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. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

View our latest analysis for Izolacja Jarocin Spolka Akcyjna

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What IZO’s beta value tells investors

Zooming in on Izolacja Jarocin Spolka Akcyjna, we see it has a five year beta of 1.11. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market the market. If the past is any guide, we would expect that Izolacja Jarocin Spolka Akcyjna shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Beta is worth considering, but it’s also important to consider whether Izolacja Jarocin Spolka Akcyjna is growing earnings and revenue. You can take a look for yourself, below.

WSE:IZO Income Statement Export January 14th 19
WSE:IZO Income Statement Export January 14th 19

How does IZO’s size impact its beta?

Izolacja Jarocin Spolka Akcyjna is a rather small company. It has a market capitalisation of zł6.5m, which means 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 excess volatility implied by this beta value.

What this means for you:

Since Izolacja Jarocin Spolka Akcyjna 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 Izolacja Jarocin Spolka Akcyjna’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

  1. Future Outlook: What are well-informed industry analysts predicting for IZO’s future growth? Take a look at our free research report of analyst consensus for IZO’s outlook.
  2. Past Track Record: Has IZO 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 IZO’s historicals for more clarity.
  3. Other Interesting Stocks: It’s worth checking to see how IZO 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.