Anyone doing research on Magal Security Systems Ltd. (NASDAQ: MAGS) might want to take into account the historical volatility of the share price. Volatility is considered a measure of risk in modern financial theory. Investors may think that volatility is divided into two main categories. The first category is the volatility specific to the company. This can be handled by limiting your exposure to a particular title. The other type, which can not be diversified, is the volatility of the entire market. Each market share is exposed to this volatility, due to the fact that stock prices are correlated in an efficient market. Some stocks see their prices move along with the market. Others tend toward stronger, softer or unrelated price movements. Beta is a widely used measure of a stock's exposure to market risk (volatility). Before proceeding, it should be noted that Warren Buffett pointed out in his 2014 letter to shareholders that "volatility is far from being risky". That said, the beta can still be quite useful. The first thing to understand about the beta is that the beta of the whole market is one. A stock with a beta greater than one is more sensitive to market movements than stocks with a beta below one. Discover our latest analyzes for Magal Security Systems Want to help shape the future of tools and investment platforms? Participate in the survey and participate in one of the most advanced studies of stock market investors to date.

What we can learn from the beta value of MAGS

With a beta of 1.04 (which is pretty close to 1), Magal Security Systems' stock price has always been about as volatile as the market at large. If the future looks like the past, we could therefore consider it likely that the share price will experience a volatility of the share price similar to that of the global market. Stock price volatility is worth considering, but most long-term investors believe the story of earnings growth and earnings growth is more important. Take a look at the Magal Security Systems results in this regard, below.

NasdaqGM: Income Statement MAGS Export 11 January 19More

Could the size of MAGS be more volatile?

Magal Security Systems is a rather small company. It has a market capitalization of 107 million USD, which means it's probably under the radar of most investors. It does not take a lot of money to actually move the stock price of a company as small as this one. This makes its beta value somewhat unusual so close to the global market.

What does this mean for you?

It is likely that there is a link between Magal Security Systems' stock price and the broader market, as its beta value is quite close to it. However, long-term investors are generally well served by examining past market volatility and focusing on the underlying development of the company. If this is your game, measures such as income, profits and cash flow will be more useful. The purpose of this article is to inform investors about beta values, but it is also important to consider important company-specific fundamentals, such as the financial health and performance performance of Magal Security Systems. I urge you to continue your research by examining the following:

  1. Future prospects: What do well-informed industry analysts predict for the future growth of MAGS? Watch our analyst consensus free research report for the prospects of MAGS.
  2. antecedents: Has MAGS always performed independently of the highs and lows of the market? Go into more detail in past performance analysis and take a look at free visual representations of MAGS history to clarify more.
  3. Other interesting actionsIt is useful to check how MAGS compares with other companies in terms of valuation. You could start with that free list of possible options.

To help readers understand the past volatility of the financial market in the short term, our goal is to provide you with a long-term research analysis based solely on fundamental data. Please note that our analysis does not take into account the latest price sensitive business announcements. The author is an independent contributor and, at the time of publication, he did not hold any position on the mentioned actions. For errors requiring correction, please contact the publisher at the address editorial-team@simplywallst.com.