For the active trader tendency of a security’s returns to respond to swings in the market is vital to know for investment. AK Steel Holding Corporation (NYSE:AKS) retains focus with Telefonica, S.A. (NYSE:TEF) in context of risk factor and volatility level. For AKS, analysts use beta value of 2.89 to measure all the time to get a sense of stocks’ risk profiles and in same manners for second firm that has 1.28 times beta. Beta is a gauge of systematic risk, which is most important measure of risk or volatility of a stock. Always a financier wondering why his stocks are fluctuating ups and down as compare to overall market does not, beta helps to answer this question.
Belonging to a portfolio with very high beta stocks may result in out-sized gains, but it can also lead to disaster. During the height of many stocks with very high betas were soaring in price only to subsequently collapse in value. An investor looking to avoid high risk investments would contain avoided speculative stocks during dot-com bubble based on beta measurements.
Once the concept of beta is understood, an investor can intuitively determine whether or not a particular stock has a high or low beta. For example, an established blue chip company in a mature industry with stable earnings will most likely have a much lower beta compared to a start up Biotechnology Company.
In recent trade, AK Steel Holding Corporation (NYSE:AKS) declared the eased down of -0.44% and finalized at $6.75 with the total traded volume of 18.46 Million shares. Beta factor for AKS was recorded as 2.89. A beta of 1.0 indicates that the stock’s price will move in lock-step with the market. A beta of less than 1 indicates the stock will be less volatile than the market, and correspondingly, a beta of more than 1 indicates the stock’s price will be more volatile than the market. In the trailing twelve months, gross profit margin was 15.00% and net profit margin of the company was 5.00%. The stock showed eased down performance of 7.14% in last week and it eased down about -6.64% in last quarter.
Telefonica, S.A. (NYSE:TEF) knock down during the previous trading session. The company noted the recent trading activity with the knock down of -1.52% and closed at $10.39. The stock has 5042.89 shares outstanding while 0.90% shares of the company were owned by institutional investors. In the profitability analysis, the company has gross profit margin of 71.60% while net profit margin was at 10.50%. Beta value of the company was 1.28. Conversely, most high-tech, Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk. Giving some intention to the performance of firm, its weekly performance was -1.98% and month’s performance was calculated as -7.40%. And TEF has Average True Range for 14 days of 0.13.