If you are a shareholder in Public Joint Stock Company “Ashinskiy metallurgical works”’s (MISX:AMEZ), or are thinking about investing in the company, knowing how it contributes to the risk and reward profile of your portfolio is important. AMEZ is exposed to market-wide risk, which arises from investing in the stock market. This risk reflects changes in economic and political factors that affects all stocks, and is measured by its beta. Not all stocks are expose to the same level of market risk, and the market as a whole represents a beta value of one. A stock with a beta greater than one is considered more sensitive to market-wide shocks compared to a stock that trades below the value of one.
See our latest analysis for Ashinskiy metallurgical works
What is AMEZ’s market risk?
Ashinskiy metallurgical works’s beta of 0.29 indicates that the company is less volatile relative to the diversified market portfolio. This means that the change in AMEZ’s value, whether it goes up or down, will be of a smaller degree than the change in value of the entire stock market index. AMEZ’s beta implies it may be a stock that investors with high-beta portfolios might find relevant if they wanted to reduce their exposure to market risk, especially during times of downturns.
Does AMEZ’s size and industry impact the expected beta?
With a market cap of RUРУБ2.00B, AMEZ falls within the small-cap spectrum of stocks, which are found to experience higher relative risk compared to larger companies. In addition to size, AMEZ also operates in the metals and mining industry, which has commonly demonstrated strong reactions to market-wide shocks. As a result, we should expect a high beta for the small-cap AMEZ but a low beta for the metals and mining industry. This is an interesting conclusion, since both AMEZ’s size and industry indicates the stock should have a higher beta than it currently has. A potential driver of this variance can be a fundamental factor, which we will take a look at next.
Is AMEZ’s cost structure indicative of a high beta?
During times of economic downturn, low demand may cause companies to readjust production of their goods and services. It is more difficult for companies to lower their cost, if the majority of these costs are generated by fixed assets. Therefore, this is a type of risk which is associated with higher beta. I examine AMEZ’s ratio of fixed assets to total assets to see whether the company is highly exposed to the risk of this type of constraint. With a fixed-assets-to-total-assets ratio of greater than 30%, AMEZ appears to be a company that invests a large amount of capital in assets that are hard to scale down on short-notice. Thus, we can expect AMEZ to be more volatile in the face of market movements, relative to its peers of similar size but with a lower proportion of fixed assets on their books. However, this is the opposite to what AMEZ’s actual beta value suggests, which is lower stock volatility relative to the market.