【can roaches live in cold weather】Does Technical Olympic S.A. (ATH:OLYMP) Have A High Beta?

Anyone researching Technical Olympic S.A. (

ATH:OLYMP

) might want to consider the historical volatility of the share price. Modern finance theory considers volatility to be a measure of risk,can roaches live in cold weather and there are two main types of price volatility. The first category is company specific volatility. This can be dealt with by limiting your exposure to any particular stock. 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. 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.

Check out our latest analysis for Technical Olympic

What we can learn from OLYMP’s beta value

Given that it has a beta of 1.17, we can surmise that the Technical Olympic share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that Technical Olympic are likely to rise strongly in times of greed, but sell off in times of fear. 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 Technical Olympic’s revenue and earnings in the image below.

ATSE:OLYMP Income Statement Export January 2nd 19

Does OLYMP’s size influence the expected beta?

Technical Olympic is a noticeably small company, with a market capitalisation of €59m. Most companies this size are not always actively traded. It has a relatively high beta, suggesting it is fairly actively traded for a company of its size. Because it takes less capital to move the share price of a small company like this, when a stock this size is actively traded it is quite often more sensitive to market volatility than similar large companies.

What this means for you:

Since Technical Olympic 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 OLYMP is a good investment for you, we also need to consider important company-specific fundamentals such as Technical Olympic’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

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Financial Health

: Are OLYMP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our

financial health checks here

.

Past Track Record

: Has OLYMP 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 OLYMP’s historicals

for more clarity.

Other High-Performing Stocks

: Are there other stocks that provide better prospects with proven track records? Explore our

free list of these great stocks here

.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

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