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Anyone researching Poligrafici Printing S.p.A. (BIT:POPR) 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 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. 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 Poligrafici Printing
What POPR's beta value tells investors
Given that it has a beta of 1.18, we can surmise that the Poligrafici Printing share price has been fairly sensitive to market volatility (over the last 5 years). Based on this history, investors should be aware that Poligrafici Printing 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 Poligrafici Printing is growing earnings and revenue. You can take a look for yourself, below.
Could POPR's size cause it to be more volatile?
Poligrafici Printing is a noticeably small company, with a market capitalisation of €18m. 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 Poligrafici Printing 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 POPR is a good investment for you, we also need to consider important company-specific fundamentals such as Poligrafici Printing’s financial health and performance track record. I highly recommend you dive deeper by considering the following: