U.S. Markets close in 1 hr 9 mins

Is Corbus Pharmaceuticals Holdings, Inc. (NASDAQ:CRBP) A Volatile Stock?

Simply Wall St

Anyone researching Corbus Pharmaceuticals Holdings, Inc. (NASDAQ:CRBP) 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 category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. 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 below one is either less volatile than the market, or more volatile but not corellated with the overall market. In comparison a stock with a beta of over one tends to be move in a similar direction to the market in the long term, but with greater changes in price.

Check out our latest analysis for Corbus Pharmaceuticals Holdings

What does CRBP's beta value mean to investors?

Zooming in on Corbus Pharmaceuticals Holdings, we see it has a five year beta of 1.80. This is above 1, so historically its share price has been influenced by the broader volatility of the stock market. If the past is any guide, we would expect that Corbus Pharmaceuticals Holdings shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. 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 Corbus Pharmaceuticals Holdings fares in that regard, below.

NasdaqGM:CRBP Income Statement, January 25th 2020

Does CRBP's size influence the expected beta?

Corbus Pharmaceuticals Holdings is a noticeably small company, with a market capitalisation of US$454m. Most companies this size are not always actively traded. 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 Corbus Pharmaceuticals Holdings 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 Corbus Pharmaceuticals Holdings’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 CRBP’s future growth? Take a look at our free research report of analyst consensus for CRBP’s outlook.
  2. Past Track Record: Has CRBP 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 CRBP's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how CRBP 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.