U.S. Markets closed

One Thing To Remember About The mVISE AG (ETR:C1V) Share Price

Simply Wall St

Anyone researching mVISE AG (ETR:C1V) might want to consider the historical volatility of the share price. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. 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 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 greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

Check out our latest analysis for mVISE

What we can learn from C1V's beta value

Looking at the last five years, mVISE has a beta of 1.44. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. Based on this history, investors should be aware that mVISE 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 mVISE is growing earnings and revenue. You can take a look for yourself, below.

XTRA:C1V Income Statement, September 22nd 2019

Could C1V's size cause it to be more volatile?

mVISE is a noticeably small company, with a market capitalisation of €25m. Most companies this size are not always actively traded. 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:

Since mVISE has a reasonably high beta, it's worth considering why it is so heavily influenced by broader market sentiment. For example, it might be a high growth stock or have a lot of operating leverage in its business model. In order to fully understand whether C1V is a good investment for you, we also need to consider important company-specific fundamentals such as mVISE’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 C1V’s future growth? Take a look at our free research report of analyst consensus for C1V’s outlook.
  2. Past Track Record: Has C1V 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 C1V's historicals for more clarity.
  3. Other Interesting Stocks: It's worth checking to see how C1V measures up against other companies on valuation. You could start with this free list of prospective options.

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.

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. Thank you for reading.