Beta rankings on a few Thai stocks.
Some recent Beta rankings of a few sectors and some of my favorably viewed stocks.
Remember, the SET index has a Beta rating of 1.00. Beta' measures the volatility of a stock, as compared to the SET index and this over some historical averages. The below rankings I got from TISCO which has among the best quantitative numbers of any broker here.
So anything under a beta of 1.0, is less volatile then the SET benchmark index, that is historically speaking. Of course over time beta's, like characters, can change, but usually not by much. Anything with a higher beta rating than 1, means it has (historically) been on average more volatile then the SET. A lower the 1 beta means, less volatile then SET.
Here I update some Beta's of a few stocks mentioned, and as compared to their sector: Usually in any stock market, the higher the beta the less the blue chip ranking as volatility is a measure of risk.
The Thai Banking sector has among the highest Beta's of 1.20. BAY has the highest Beta, of 1.43. (I don't like the banks and here you see why, they are a nervous bunch and with the massive floods of recent some say the non-performing loans will come back to haunt them?). Thai Banks often have high beta’s, so do any large cap stocks here on the SET. Perhaps their rankings is even higher now, due to their good performance year to date.
The commerce sector as a whole has a beta of 0.37. The lowest in that sector is HMPRO at 0.137, the
highest there is ROBINS at 0.68.
Energy and Utilities sector has a high beta ranking of 1.24, and IRPC is among the highest of the group, at 1.41 with only PTTAR higher at 1.63.
MAJOR has a beta rating of 0.79 vs. its sector (Media & Publishing), at only 0.38.
Property Development has an overall Beta of 0.77 and PRIN has among the lowest of 0.43. I still am sticking to PRIN for high dividend, non SET correlation, and not least good earnings growth resuming next year.
In modern portfolio theory one wants to combine stocks of high with low beta's, so to reduce the overall volatility. Note how the Thai big cap's have almost all high Beta's. PTT's for example is a volatile one, at 1.43 and it’s the largest SET stock, by market cap. By the way, DEMCO has a 1 year beta ranking of only 0.02 and a 3 year historically beta of only 0.11.
If there was a stock with a negative beta, say below 0, then this would mean a tendency for an inverse to SET correlation, but I saw only one L & E Lighting. I don't think to invest in a stock because of its beta ranking, its just one tool. I think only gold and oil tend to have negative beta’s, vs. a stock index, but they are different types of assets. Surely there are plenty of stocks which move up when/if the oil price moves up, like I think IRPC would. Chosing IRPC as my latest big cap selection which such a high beta’ confirms that I remain SET bullish over the medium term and into year 2011.
Best Regards,
Paul Renaud.
