What Kind Of Share Price Volatility Should You Expect For Cellectar Biosciences, Inc. (NASDAQ:CLRB)?

Anyone researching Cellectar Biosciences, Inc. (NASDAQ:CLRB) might want to consider the historical volatility of the share price. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The other type, which cannot be diversified away, is the volatility of the entire market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient 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.

See our latest analysis for Cellectar Biosciences

What we can learn from CLRB's beta value

Given that it has a beta of 1.43, we can surmise that the Cellectar Biosciences share price has been fairly sensitive to market volatility (over the last 5 years). If this beta value holds true in the future, Cellectar Biosciences shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Beta is worth considering, but it's also important to consider whether Cellectar Biosciences is growing earnings and revenue. You can take a look for yourself, below.

Does CLRB's size influence the expected beta?

Cellectar Biosciences is a rather small company. It has a market capitalisation of US$23m, 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 Cellectar Biosciences 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 Cellectar Biosciences’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 CLRB’s future growth? Take a look at our free research report of analyst consensus for CLRB’s outlook.
2. Past Track Record: Has CLRB 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 CLRB's historicals for more clarity.
3. Other Interesting Stocks: It's worth checking to see how CLRB measures up against other companies on valuation. You could start with this free list of prospective options.

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