Want to participate in a short research study? Help us shape the future of investment tools and get a chance to win a $ 250 gift card!Anyone looking for HOCHDORF Holding AG (VTX: HOCN) 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 type is company-specific volatility. Investors use uncorrelated equity diversification to reduce this type of price volatility across the entire portfolio. The other type, which can not be diversified, is the volatility of the entire market. Each market share is exposed to this volatility, linked to the fact that stock prices are correlated in an efficient market. Some stocks see their prices evolve in concert with the market. Others tend toward stronger, softer or unrelated price movements. Some investors use beta to measure the impact of market risk (volatility) on a given stock. We must keep in mind that Warren Buffett warned that "volatility is far from risk," but the beta remains a useful factor to consider. To make good use of it, you must first know that the beta of the market is one. Any stock with a beta greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or weakly correlated with the market. View our latest analysis for HOCHDORF Holding

What we can learn from the beta value of HOCN

Zooming on HOCHDORF Holding, we find that it has a five-year beta of 0.81. Since it is less than 1, its share price has always been rather independent of the market. If history is a good guide, equity ownership should help you avoid that your portfolio is too sensitive to market volatility. Many would argue that beta is useful for sizing positions, but that fundamental measures such as income and profits are more important in general. You can see the business figure and profit of HOCHDORF Holding in the picture below.

SWX: Income Statement HOCN Export 11 February 19More

Does the size of HOCN influence the expected beta?

HOCHDORF Holding, with a market capitalization of CHF 182 million, is a very small company worldwide. It is very likely that it is unknown to most investors. Very small businesses often have a low beta value because the price of their shares is not well correlated with market volatility. This could be due to the fact that the price reacts to company-specific events. Alternatively, the shares may not be actively traded.

What does this mean for you?

As HOCHDORF Holding is not strongly influenced by market movements, its share price probably depends much more on the specific developments of the company. It might be worthwhile to take a closer look at indicators such as revenue growth, earnings growth and debt. To fully understand if HOCN is a good investment for you, we also need to consider important fundamentals of a company, such as the financial health and performance of HOCHDORF Holding. 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 HOCN? Watch our free analyst consensus research report for the prospects of HOCN.
  2. antecedents: Has HOCN always been successful regardless of the ups and downs of the market? Go into more detail in past performance analysis and take a look at free visual representations of HOCN histories to clarify more.
  3. Other interesting actions: It should be checked how HOCN compares to other companies in terms of evaluation. 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 that need to be corrected, please contact the publisher at the address editorial-team@simplywallst.com.