Check out our latest analysis for Zion Oil & Gas. Zion Oil & Gas’s beta of 0.15 indicates that the corporate is a smaller amount volatile relative to the diversified market portfolio. this suggests that the change in ZN’s value, whether it goes up or down, is going to be of a smaller degree than the change in the value of the whole stock exchange index. supported this beta value, ZN appears to be a stock that an investor with a high-beta portfolio would search for to scale back risk exposure to the market.
Does ZN’s size and industry impact the expected beta
With a market cap of US$266.98M, ZN falls within the small-cap spectrum of stocks. Which are found to experience higher relative risk compared to larger companies? Additionally, to size, ZN also operates within the oil and gas industry, which has commonly demonstrated. Strong reactions to market-wide shocks. Therefore, investors may expect high beta related to small companies, also as those operating. Within the oil and gas industry, relative to those more well-established firms during a more defensive industry. It seems as if there’s an inconsistency in risks portrayed by ZN’s size and industry relative to its actual beta value. There could also be a more fundamental driver which may explain this inconsistency, which we’ll examine below.
Is ZN’s cost structure indicative of a high beta?
An asset-heavy company tends to possess a better beta. Because of the danger related to running fixed assets during a downturn is very expensive. I test ZN’s ratio of fixed assets to total assets so as to work out how high. The danger is related to this sort of constraint. Thus, we will expect ZN to be more volatile. Within the face of market movements, relative to its peers of comparable size. But with a lower proportion of fixed assets on their books. However, this is often the other to what ZN’s actual beta value suggests, which is lower stock volatility relative to the market.