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Nov 28

Does Heartland Group Holdings Limited (NZSE:HGH) Have A High Beta? – Simply Wall St

Hgh Comments Off on Does Heartland Group Holdings Limited (NZSE:HGH) Have A High Beta? – Simply Wall St

If you own shares in Heartland Group Holdings Limited (NZSE:HGH) then its 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 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. 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 Heartland Group Holdings

Given that it has a beta of 0.84, we can surmise that the Heartland Group Holdings share price has not been strongly impacted by broader market volatility (over the last 5 years). This suggests that including it in your portfolio will reduce volatility arising from broader market movements, assuming your portfolios weighted average beta is higher than 0.84. Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see Heartland Group Holdingss revenue and earnings in the image below.

Heartland Group Holdings is a small cap stock with a market capitalisation of NZ$987m. Most companies this size are actively traded. Small companies can have a low beta value when company specific factors outweigh the influence of overall market volatility. That might be happening here.

Since Heartland Group Holdings is not heavily influenced by market moves, its share price is probably far more dependend on company specific developments. It could pay to take a closer look at metrics such as revenue growth, earnings growth, and debt. This article aims to educate investors about beta values, but its well worth looking at important company-specific fundamentals such as Heartland Group Holdingss financial health and performance track record. I urge you to continue your research by taking a look at the following:

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.

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Does Heartland Group Holdings Limited (NZSE:HGH) Have A High Beta? - Simply Wall St

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