We’ve been pondering the next recession since the GFC. There have been warning signs, in 2011, 2015, 2016 and the last quarter of last year.

But Wednesday’s ‘inverted yield curve’ was the most ominous sign of all, considering every time it has happened in the last 40 years a US recession has occurred within two years.

It’s inevitable that if this eventuates investors will flee to safer haven assets and the majority of stocks will fall. But some will hold firm or even grow. How can you tell?

One way might be to look at industries people will always want. It is commonly said alcohol is one because people drink both to celebrate and commiserate. But an MIT study found alcohol consumption actually fell 6.5 per cent during the GFC.

This said, there are other technical measures which may indicate how it follows or doesn’t follow the market.

Meet Beta

A company’s beta is a measure of how it aligns with the broader stock market. Theoretically if the beta is 1 the company should follow the market exactly – so if it goes up 2 per cent it should do exactly likewise.

Any number above 1 and the company should do better – for instance if a stock’s beta was 1.5 it should go up 3 per cent when the market goes up 2. If it is between 0 and 1 may follow the market but not as strong.

Any company with a negative beta is considered recession-proof because theoretically it will go up when the market goes down. However, it should go down when the market goes up.

There is a complicated formula to find beta or alternatively it can be found through Excel functions. The calculation essentially looks at a broader index and one company’s percentage returns over a period of time.

1 Year Betas

Now here is the stocks with highly negative year to date betas.

Code Name Price (I) Beta YTD Market Cap
IXU IXUP LTD 0.095 -0.51 $ 15,052,156.00
SGO STREAM GROUP LTD 0.015 -0.51 $ 3,289,946.50
NES NELSON RESOURCES LTD 0.045 -0.51 $ 2,051,678.13
CLA CELSIUS RESOURCES LTD 0.018 -0.52 $ 15,144,362.00
NCR NUCOAL RESOURCES LTD 0.019 -0.53 $ 14,603,636.00
DTM DART MINING NL 0.005 -0.54 $ 5,086,880.50
SUR SUN RESOURCES NL 0.003 -0.55 $ 2,868,172.75
MSE METALSEARCH LTD 0.011 -0.55 $ 5,770,922.00
OLH OLDFIELDS HOLDINGS LTD 0.050 -0.55 $ 4,108,810.00
LKE LAKE RESOURCES NL 0.061 -0.55 $ 30,128,992.00
CHZ CHESSER RESOURCES LTD 0.035 -0.59 $ 9,204,867.00
TSC TWENTY SEVEN CO LTD 0.005 -0.61 $ 4,995,306.50
KKL KOLLAKORN CORP LTD 0.013 -0.64 $ 2,841,809.25
RIM RIMFIRE PACIFIC MINING NL 0.003 -0.66 $ 4,021,475.25
SIH SIHAYO GOLD LTD 0.013 -0.66 $ 30,131,766.00
IBX IMAGION BIOSYSTEMS LTD 0.050 -0.67 $ 16,185,266.00
CAV CARNAVALE RESOURCES LTD 0.002 -0.68 $ 2,265,653.75
MCX MARINER CORP LTD 0.045 -0.70 $ 618,213.69
HAS HASTINGS TECHNOLOGY METALS L 0.145 -0.71 $ 135,989,936.00
PCL PANCONTINENTAL OIL & GAS NL 0.002 -0.73 $ 10,813,431.00
GCR GOLDEN CROSS RESOURCES LTD 0.019 -0.82 $ 1,930,822.38
INP INCENTIAPAY LTD 0.032 -0.82 $ 7,763,785.00
GPP GREENPOWER ENERGY LTD 0.002 -0.84 $ 4,004,490.50
SIL SMILES INCLUSIVE LTD 0.110 -0.86 $ 7,661,626.00
DDD 3D RESOURCES LTD 0.002 -0.87 $ 2,214,442.25
MSI MULTISTACK INTERNATIONAL LTD 0.005 -0.88 $ 561,519.63
HOR HORSESHOE METALS LTD 0.015 -0.90 $ 2,919,782.75
ZNO ZOONO GROUP LTD 0.076 -0.92 $ 12,738,391.00
AUH AUSTCHINA HOLDINGS LTD 0.004 -0.92 $ 5,569,963.00
MHC MANHATTAN CORP LTD 0.004 -0.98 $ 2,965,114.75
TPD TALON PETROLEUM LTD 0.002 -1.04 $ 4,441,974.00
OLV OTHERLEVELS HOLDINGS LIMITED 0.009 -1.06 $ 2,581,572.50
QGL QUANTUM GRAPHITE LTD 0.002 -1.11 $ 15,321,162.00
FTT FACTOR THERAPEUTICS LTD 0.004 -1.12 $ 3,649,924.75
FGO FLAMINGO AI LTD 0.006 -1.13 $ 6,720,766.00
EN1 ENGAGE:BDR LTD 0.033 -1.21 $ 19,405,298.00
BLY BOART LONGYEAR LTD 0.006 -1.26 $ 157,777,296.00
PBX PACIFIC BAUXITE LTD 0.005 -1.27 $ 1,983,070.13
ADV ARDIDEN LTD 0.003 -1.28 $ 5,071,560.50
AHK ARK MINES LTD 0.054 -1.34 $ 2,976,993.50
GMR GOLDEN RIM RESOURCES LTD 0.016 -1.48 $ 13,144,752.00
KLH KALIA LTD 0.001 -1.50 $ 2,514,347.50
MLS METALS AUSTRALIA LTD 0.002 -1.57 $ 5,854,395.50
BAS BASS OIL LTD 0.002 -1.60 $ 5,844,280.00
CDH CHONGHERR INVESTMENTS LTD 0.013 -1.62 $ 1,692,696.13
VPR VOLT POWER GROUP LTD 0.002 -1.72 $ 8,244,533.50
NOR NORWOOD SYSTEMS LTD 0.004 -1.79 $ 9,344,296.00
OCC ORTHOCELL LTD 0.405 -1.91 $ 64,036,964.00
NWE NORWEST ENERGY NL 0.003 -2.13 $ 11,837,325.00
SRO SHAREROOT LTD 0.001 -2.21 $ 2,849,065.50
ADD ADAVALE RESOURCES LTD 0.009 -2.32 $ 1,074,880.00
APG AUSTPAC RESOURCES NL 0.001 -3.57 $ 2,908,615.00

At the bottom of the list is Auspac Resources (ASX: APG) which began the year at 0.2 cents then fell to 0.1 cents on January 3.

It has had 3 brief bounces to 1.5 cents then one jump to 2 cents on August 2 but each time it has fallen back to one cent – hence explaining its negative beta.

You may be surprised to see Orthocell (ASX: OCC) on this list given its near quadrupling back in May due to its nerve regeneration treatment working. Prior to this it slowly fell 24 per cent in four months.

While it still is 179 per cent higher than in January, it has had a number of share price falls, minuscule in nature but most were the direst opposite to the direction the market is going.

1 Month Betas

Stockhead presents a list of ASX small caps by highly negative 1 month beta.

Austpac Resources (ASX: APG) lies third on this list.

Chongherr Investments (ASX: CDH) is at the heavy end of the list despite its 333 per cent gain on July 26. It has not moved at all since then while the market has moved substantially (although mainly downward).

Code Name 1 Month Beta Market Cap Price 15-Aug
CY5 CYGNUS GOLD LTD -2.01 4.37M 0.07
IPT IMPACT MINERALS LTD -2.07 13.22M 0.01
AUH AUSTCHINA HOLDINGS LTD -2.12 5.57M 0.004
N1H N1 HOLDINGS LTD -2.17 2.85M 0.04
MBM MOBECOM LTD -2.42 11.12M 0.04
DTR DATELINE RESOURCES LTD -2.45 32.54M 0.004
MSM MSM CORPORATION INTERNATIONA -2.59 11.27M 0.01
SAN SAGALIO ENERGY LTD -2.61 409.32k 0.002
DDT DATADOT TECHNOLOGY LTD -2.65 5.67M 0.01
MCX MARINER CORP LTD -2.65 618.21k 0.05
IBX IMAGION BIOSYSTEMS LTD -2.66 16.19M 0.05
A1G AFRICAN GOLD LTD -2.71 9.37M 0.17
RMG RMG LTD -3.14 7.01M 0.01
BLY BOART LONGYEAR LTD -3.15 157.78M 0.01
OLV OTHERLEVELS HOLDINGS LIMITED -3.24 2.58M 0.01
RXH REWARDLE HOLDINGS LTD -3.29 3.16M 0.01
GMR GOLDEN RIM RESOURCES LTD -4.59 13.14M 0.02
AKN AUKING MINING LTD -4.77 932.58k 0.001
CFO CFOAM LTD -5.14 17.61M 0.15
LKO LAKES OIL NL -5.43 33.37M 0.001
APG AUSTPAC RESOURCES NL -9.83 2.91M 0.001
MLS METALS AUSTRALIA LTD -10.1 5.85M 0.002
CDH CHONGHERR INVESTMENTS LTD -19.36 1.69M 0.01