Before Buying OneSoft Solutions Inc. (CVE:OSS), Consider Its Volatility

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If you own shares of OneSoft Solutions Inc. (CVE:OSS), it’s worth thinking about how they contribute to the volatility of your overall portfolio. In finance, beta is a measure of volatility. Modern financial theory views volatility as a measure of risk, and there are two main types of price volatility. The first type is company-specific volatility. You can address this by limiting your exposure to a particular stock. The second type is broader market volatility, which you can’t diversify away from because it’s a result of macroeconomic factors that directly affect all stocks in the market.

Some stocks replicate market volatility quite closely, while others exhibit muted, exaggerated, or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett stated that “volatility is far from synonymous with risk” in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of 1. A stock with a beta less than 1 is either less volatile than the market or more volatile but uncorrelated to the overall market. In comparison, a stock with a beta greater than 1 tends to move in a similar direction to the market over the long term, but with larger price swings.

Check out our latest analysis for OneSoft Solutions

What does OSS beta mean for investors?

Focusing on OneSoft Solutions, we see that it has a five-year beta of 1.96. That’s higher than 1, so historically its stock price has been influenced by broader stock market volatility. If this beta value holds true in the future, OneSoft Solutions’ shares are likely to rise more than the market when the market is rising, but fall faster when the market is falling. Beta is worth considering, but it’s also important to consider whether OneSoft Solutions is growing its earnings and revenue. You can take a look for yourself, below.

Does OSS size influence expected beta?

With a market capitalization of CA$59 million, OneSoft Solutions is a very small company by global standards. It is likely unknown to most investors. It has a relatively high beta, suggesting that it is fairly actively traded for a company of its size. Since it takes less capital to move the stock price of a small company like this, when a stock of this size is actively traded, it is often more susceptible to market volatility than similar larger companies.

What this means for you:

Since OneSoft Solutions tends to rise when the market is up and fall when it is down, potential investors may want to think about the market as a whole when considering buying the stock. This article is intended to educate investors about beta values, but it is worth looking at important company-specific fundamentals, such as OneSoft Solutions’ financial health and track record. I highly recommend doing more research by considering the following:

1. Financial health:Are OSS operations financially viable? Balance sheets can be difficult to analyze, so we did it for you. Check out our financial health checks here.

2. Background History:Has OSS consistently performed well, regardless of market ups and downs? Dig deeper into past performance analysis and take a look at free visual representations of OSS historical data for more clarity.

3. Other high-performance stocks:Are there other stocks with better prospects and a proven track record? Check out our free list of these great stocks here.

To help readers see beyond the short-term volatility of the financial market, we would like to offer you a long-term focused research analysis, based purely on fundamental data. Please note that our analysis does not take into account the latest announcements of price-sensitive companies.

The author is an independent contributor and had no position in the stocks mentioned at the time of publication. For errors that need to be corrected, please contact the editor at [email protected].