Risk Analysis Of Cyber Security Stocks

If you’re looking to add cybersecurity to your portfolio, this is a good place to start. Note: I work mostly with startups, where the investment metrics are a lot more difficult to calculate/predict…:

When picking securities from a fast-growing sector like the cybersecurity (HACK) sector, after performing fundamental analysis to examine stocks that should be added to your portfolio, it is equally imperative that you perform a risk analysis. When performing a risk analysis, a peer-based risk analysis is recommended. This provides a basket of comparison for the stocks in your portfolio. While risk analysis can’t be used to predict future returns, it can help understand three things:

  1. The success and evolution of a group of highly correlated stocks over the years.
  2. Investors’ sentiment and attitude towards the stocks as captured by the level of volatility which is often driven by management’s performance, guidance, and the level of macro uncertainty.
  3. The risk to reward measure of the stocks.

In this analysis, we will be performing a risk assessment of eight cybersecurity stocks from October 2013 to December 2018.

Original article here