U.S. markets close in 3 hours 5 minutes
  • S&P 500

    3,435.80
    -7.32 (-0.21%)
     
  • Dow 30

    28,213.68
    -95.11 (-0.34%)
     
  • Nasdaq

    11,484.29
    -32.20 (-0.28%)
     
  • Russell 2000

    1,610.66
    -7.05 (-0.44%)
     
  • Crude Oil

    39.99
    -1.71 (-4.10%)
     
  • Gold

    1,930.80
    +15.40 (+0.80%)
     
  • Silver

    25.27
    +0.30 (+1.18%)
     
  • EUR/USD

    1.1876
    +0.0048 (+0.40%)
     
  • 10-Yr Bond

    0.8090
    +0.0120 (+1.51%)
     
  • GBP/USD

    1.3164
    +0.0217 (+1.68%)
     
  • USD/JPY

    104.4740
    -0.9960 (-0.94%)
     
  • BTC-USD

    12,810.24
    +1,753.23 (+15.86%)
     
  • CMC Crypto 200

    256.61
    +11.72 (+4.79%)
     
  • FTSE 100

    5,776.50
    -112.72 (-1.91%)
     
  • Nikkei 225

    23,639.46
    +72.42 (+0.31%)
     

Is Champions Oncology, Inc. (NASDAQ:CSBR) A Volatile Stock?

Simply Wall St
·4 mins read

If you own shares in Champions Oncology, Inc. (NASDAQ:CSBR) 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 category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. 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. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said 'volatility is far from synonymous with risk' in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of 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.

View our latest analysis for Champions Oncology

What CSBR's beta value tells investors

Zooming in on Champions Oncology, we see it has a five year beta of 1.41. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. Based on this history, investors should be aware that Champions Oncology are likely to rise strongly in times of greed, but sell off in times of fear. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Champions Oncology fares in that regard, below.

NasdaqCM:CSBR Income Statement April 27th 2020
NasdaqCM:CSBR Income Statement April 27th 2020

How does CSBR's size impact its beta?

Champions Oncology is a rather small company. It has a market capitalisation of US$95m, which means it is probably under the radar of most investors. It has a relatively high beta, suggesting it is fairly actively traded for a company of its size. Because it takes less capital to move the share price of a small company like this, when a stock this size is actively traded it is quite often more sensitive to market volatility than similar large companies.

What this means for you:

Beta only tells us that the Champions Oncology share price is sensitive to broader market movements. This could indicate that it is a high growth company, or is heavily influenced by sentiment because it is speculative. Alternatively, it could have operating leverage in its business model. Ultimately, beta is an interesting metric, but there's plenty more to learn. This article aims to educate investors about beta values, but it's well worth looking at important company-specific fundamentals such as Champions Oncology’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 CSBR’s future growth? Take a look at our free research report of analyst consensus for CSBR’s outlook.

  2. Past Track Record: Has CSBR 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 CSBR's historicals for more clarity.

  3. Other Interesting Stocks: It's worth checking to see how CSBR measures up against other companies on valuation. You could start with this free list of prospective options.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.