Does Para Resources Inc. (CVE:PBR) Have A High Beta?

Simply Wall St

February 6, 2020 at 6:32 AM·3 min read

If you own shares in Para Resources Inc. (CVE:PBR) then it's 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. 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 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. 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.

See our latest analysis for Para Resources

What we can learn from PBR's beta value

Looking at the last five years, Para Resources has a beta of 1.10. The fact that this is well above 1 indicates that its share price movements have shown sensitivity to overall market volatility. If this beta value holds true in the future, Para Resources shares are likely to rise more than the market when the market is going up, but fall faster when the market is going down. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. Take a look at how Para Resources fares in that regard, below.

TSXV:PBR Income Statement, February 5th 2020

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

Para Resources is a rather small company. It has a market capitalisation of CA$27m, which means it is probably under the radar of most investors. It takes less money to influence the share price of a very small company. This may explain the excess volatility implied by this beta value.

What this means for you:

Since Para Resources 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 PBR is a good investment for you, we also need to consider important company-specific fundamentals such as Para Resources’s financial health and performance track record. I highly recommend you dive deeper by considering the following:

Financial Health: Are PBR’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 PBR 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 PBR'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.

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.

Associated Press
Winter is hitting Gaza and many Palestinians have little protection from the cold
Winter is hitting the Gaza Strip and many of the nearly 2 million Palestinians displaced by the devastating 14-month war with Israel are struggling to protect themselves from the wind, cold and rain. There is a shortage of blankets and warm clothing, little wood for fires, and the tents and patched-together tarps families are living in have grown increasingly threadbare after months of heavy use, according to aid workers and residents. Shadia Aiyada, who was displaced from the southern city of Rafah to the coastal area of Muwasi, has only one blanket and a hot water bottle to keep her eight children from shivering inside their fragile tent.
CBS News
NYPD chief resigns amid sexual misconduct claims
NYPD Chief of Department Jeffrey Maddrey has resigned following allegations of sexual misconduct, the department says.
Associated Press
As flooding becomes a yearly disaster in South Sudan, thousands survive on the edge of a canal
Long-horned cattle wade through flooded lands and climb a slope along a canal that has become a refuge for displaced families in South Sudan. “Too much suffering,” said Bichiok Hoth Chuiny, a woman in her 70s. Such flooding is becoming a yearly disaster in South Sudan, which the World Bank has described as “the world’s most vulnerable country to climate change and also the one most lacking in coping capacity."
CNN
Two US Navy pilots eject safely over Red Sea after fighter jet shot down in apparent friendly fire incident
Two US Navy pilots ejected safely after their fighter jet was shot down over the Red Sea on Saturday in an apparent friendly fire incident, US Central Command said in a statement.
AFP
Iraq's prohibition zeal threatens Baghdad's boozy subculture
The smell of dampness rises through the dust at a private club in central Baghdad, one of many shut in a crackdown on alcohol sales in Iraq.Several private "social" clubs that have operated in Baghdad for decades were sent official letters in November forbidding them from manufacturing and serving alcoholic beverages.
Associated Press
Two US Navy pilots shot down over Red Sea in apparent 'friendly fire' incident, US military says
Two U.S. Navy pilots were shot down Sunday over the Red Sea in an apparent “friendly fire” incident, the U.S military said, marking the most serious incident to threaten troops in over a year of America targeting Yemen's Houthi rebels. The U.S. military had conducted airstrikes targeting Yemen’s Houthi rebels at the time, though the U.S. military’s Central Command did not elaborate on what their mission was and did not immediately respond to questions from The Associated Press.
AFP
Tunisia women herb harvesters struggle with drought and heat
On a hillside in Tunisia's northwestern highlands, women scour a sun-scorched field for the wild herbs they rely on for their livelihoods, but droughts and rising temperatures are making it ever harder to find the precious plants.Wildfires fuelled by drought and rising temperatures have ravaged these woodlands, further diminishing the natural resources that women like Soudani depend on.
AFP
Trump threatens to take back control of Panama Canal
Incoming US president Donald Trump on Saturday slammed what he called unfair fees for US ships passing through the Panama Canal and threatened to demand control of the waterway be returned to Washington.He continued that if Panama could not ensure "the secure, efficient and reliable operation" of the channel, "then we will demand that the Panama Canal be returned to us, in full, and without question."
Politico
Trump taps billionaire Houston Rockets owner Tilman Fertitta as Italy ambassador
Fertitta has never held political office but is a longtime GOP donor — including to Trump’s Save America PAC.
Associated Press
The water was their livelihood. Now Thailand's sea nomads work to preserve a vanishing way of life
When Hook was a child, he started his days by jumping off the boat that his family lived on and into the ocean. Now Hook, whose full name is Suriyan Klathale, lives on land like the rest of his community, a people known as the Moken. The recollections of his childhood, which many Moken of his generation still have, are mostly just memories.
Associated Press
Fleeing motorist is dead after driving into Texas shopping mall and injuring 5
A fleeing motorist drove a pickup truck into a busy JCPenney store in Texas on Saturday, injuring five people before he was fatally shot by law enforcement, authorities said. Four of the injured people were taken from the Killeen mall to hospitals and the fifth went on their own, Sgt. Bryan Washko of the Texas Department of Public Safety said in an evening media briefing. Ofelia Miramontez of the Killeen Police Department said the incident began with calls about an erratic driver in a black pickup in Belton, about 20 miles (30 kilometers) away.
Reuters
Trump says he might demand Panama hand over canal
President-elect Donald Trump on Saturday accused Panama of charging excessive rates for use of the Panama Canal and said that if Panama did not manage the canal in an acceptable fashion, he would demand the U.S. ally hand it over. In an evening post on Truth Social, Trump also warned he would not let the canal fall into the "wrong hands," and he seemed to warn of potential Chinese influence on the passage, writing the canal should not be managed by China. It also underlines an expected shift in U.S. diplomacy under Trump, who has not historically shied away from threatening allies and using bellicose rhetoric when dealing with counterparts.
AFP
In ruined homes, Palestinians recall Assad's torture
School lessons ended in Syria's biggest Palestinian refugee camp on October 18, 2012, judging by the date still chalked up on the board more than a decade later.According to the United Nations agency for Palestinian refugees, UNRWA, at the start of Syria's conflict in 2011 it was home to 160,000 registered refugees.
CNN
How a teenager’s holiday romance led to prison time in Dubai
British citizen Marcus Fakana, 18, is facing a one-year prison sentence for his summer romance with a London teenager, 17, who he met while on holiday in the United Arab Emirates.
Politico
Biden could foil Trump’s plans to resume federal executions
The president is considering using his clemency power to convert federal death sentences to life in prison.
NBC News
Lara Trump says she's removed her name from contention to be Florida's senator
Lara Trump, President-elect Donald Trump's daughter-in-law, said on Saturday that she decided to remove her name from consideration to be a senator in Florida.
AFP
India's architecture fans guard Mumbai's Art Deco past
A towering cinema with a roofline like an ocean liner stands out in India's financial capital Mumbai, part of a remarkable Art Deco architectural heritage that campaigners say needs protection.Architects used geometric patterns and streamlined structures to evoke the popular technologies of the time, including airplanes and ocean liners.
Politico
Trump threatens to retake Panama Canal
The U.S. ceded control of the canal to Panama in 1999 pursuant to a Carter administration treaty
Politico
Lara Trump removes herself from Florida Senate sweepstakes
Lara Trump, who recently stepped down from her post as co-chair of the Republican National Committee, announced her decision Saturday evening in a social media post.
AFP
Large earthquake hits battered Vanuatu
A magnitude-6.1 earthquake rattled buildings on Vanuatu's main island early Sunday but did not appear to have caused major damage, five days after a more powerful quake wreaked havoc and killed 12 people."It gave a better bit of a shake and the windows rattled a little bit, it would have caused houses to rattle," he said.

What we can learn from PBR's beta value

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

What this means for you:

Latest Stories