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What Kind Of Share Price Volatility Should You Expect For Amtech Systems, Inc. (NASDAQ:ASYS)?

Simply Wall St
·3 mins read

If you own shares in Amtech Systems, Inc. (NASDAQ:ASYS) 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. The first type is company specific volatility. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. 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 greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

View our latest analysis for Amtech Systems

What we can learn from ASYS's beta value

Given that it has a beta of 1.81, we can surmise that the Amtech Systems share price has been fairly sensitive to market volatility (over the last 5 years). If the past is any guide, we would expect that Amtech Systems shares will rise quicker than the markets in times of optimism, but fall faster in times of pessimism. Beta is worth considering, but it's also important to consider whether Amtech Systems is growing earnings and revenue. You can take a look for yourself, below.

NasdaqGS:ASYS Income Statement April 17th 2020
NasdaqGS:ASYS Income Statement April 17th 2020

How does ASYS's size impact its beta?

With a market capitalisation of US$68m, Amtech Systems is a very small company by global standards. It is quite likely to be unknown to most investors. Relatively few investors can influence the price of a smaller company, compared to a large company. This could explain the high beta value, in this case.

What this means for you:

Beta only tells us that the Amtech Systems 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. In order to fully understand whether ASYS is a good investment for you, we also need to consider important company-specific fundamentals such as Amtech Systems’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 ASYS’s future growth? Take a look at our free research report of analyst consensus for ASYS’s outlook.

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

  3. Other Interesting Stocks: It's worth checking to see how ASYS 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.