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Does Altri, S.G.P.S., S.A. (ELI:ALTR) Have A High Beta?

Simply Wall St

If you own shares in Altri, S.G.P.S., S.A. (ELI:ALTR) then it's worth thinking about how it contributes to the volatility of your portfolio, overall. In finance, Beta is a measure of volatility. Volatility is considered to be a measure of risk in modern finance theory. Investors may think of volatility as falling into two main categories. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. 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 is a widely used metric to measure a stock's exposure to market risk (volatility). Before we go on, it's worth noting that Warren Buffett pointed out in his 2014 letter to shareholders that 'volatility is far from synonymous with risk.' Having said that, beta can still be rather useful. The first thing to understand about beta is that the beta of the overall market is 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.

See our latest analysis for Altri S.G.P.S

What we can learn from ALTR's beta value

Given that it has a beta of 1.13, we can surmise that the Altri S.G.P.S share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that Altri S.G.P.S are likely to rise strongly in times of greed, but sell off in times of fear. Beta is worth considering, but it's also important to consider whether Altri S.G.P.S is growing earnings and revenue. You can take a look for yourself, below.

ENXTLS:ALTR Income Statement, December 10th 2019

Could ALTR's size cause it to be more volatile?

Altri S.G.P.S is a small cap stock with a market capitalisation of €1.2b. Most companies this size are actively traded. It's not particularly surprising that it has a higher beta than the overall market. That's because it takes less money to influence the share price of a smaller company, than a bigger company.

What this means for you:

Since Altri S.G.P.S 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 Altri S.G.P.S’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

  1. Future Outlook: What are well-informed industry analysts predicting for ALTR’s future growth? Take a look at our free research report of analyst consensus for ALTR’s outlook.
  2. Past Track Record: Has ALTR 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 ALTR's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how ALTR 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.