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Will Sonoma Pharmaceuticals (NASDAQ:SNOA) current volatility rise scare investors?
 | By Rifka Kats | Macroaxis Story |
It appears Sonoma Pharmaceuticals will continue to recover much faster as its share price surged up 42.90% today. The entity's current daily volatility is 6.61 percent, with a beta of -0.07 and an alpha of 0.47 over DOW. While some millenniums are indifferent towards elevated trading volume, it makes sense to go over Sonoma Pharmaceuticals. We will evaluate why we are still optimistic in anticipation of a recovery.
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Reviewed by Michael Smolkin
Sonoma Pharmaceuticals conducts business under Healthcare sector and is part of Drug Manufacturers—Specialty & Generic industry.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Sonoma Pharmaceuticals. Your research has to be compared to or analyzed against Sonoma Pharmaceuticals' peers to derive any actionable benefits. When done correctly, Sonoma Pharmaceuticals' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Sonoma Pharmaceuticals.
Investing in Sonoma Pharmaceuticals, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Sonoma Pharmaceuticals along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Sonoma Pharmaceuticals' price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Watch out for price decline
Please consider monitoring Sonoma Pharmaceuticals on a daily basis if you are holding a position in it. Sonoma Pharmaceuticals is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Sonoma Pharmaceuticals stock to be traded above the $1 level to remain listed. If Sonoma Pharmaceuticals stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
How important is Sonoma Pharmaceuticals's Liquidity
Sonoma Pharmaceuticals financial leverage refers to using borrowed capital as a funding source to finance Sonoma Pharmaceuticals ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Sonoma Pharmaceuticals financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Sonoma Pharmaceuticals' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Sonoma Pharmaceuticals' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Sonoma Pharmaceuticals's total debt and its cash.
Sonoma Pharmaceuticals Gross Profit
Sonoma Pharmaceuticals Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Sonoma Pharmaceuticals previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Sonoma Pharmaceuticals Gross Profit growth over the last 10 years. Please check Sonoma Pharmaceuticals' gross profit and other fundamental indicators for more details.
Sonoma Pharmaceuticals Correlation with Peers
Investors in Sonoma can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Sonoma Pharmaceuticals. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Sonoma Pharmaceuticals and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Sonoma is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Sonoma for more details
A Deeper look at Sonoma
Sonoma Pharmaceuticals appears to be moderately volatile, given 1 month investment horizon. Sonoma Pharmaceuticals owns Efficiency Ratio (i.e. Sharpe Ratio) of 0.0706, which indicates the firm had 0.0706% of return per unit of risk over the last month. Our standpoint towards measuring the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-seven technical indicators for Sonoma Pharmaceuticals, which you can use to evaluate future volatility of the company. Please operate Sonoma Pharmaceuticals Coefficient Of Variation of 1401.09, risk adjusted performance of 0.0911, and Semi Deviation of 3.03 to confirm if our risk estimates are consistent with your expectations.
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