ALKEM LABORATORIES LTD.

1897.25 +7.13 (+0.38%) Buy

Looking to invest in ALKEM? Consider it, because it showed marginal outperformance

13 min read

ALKEM LABORATORIES LTD. showed marginal outperformance on Friday. It increased by +0.38% to close at 1897.25. On a day when the overall market breadth was 71%, it closed higher than 48% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing ALKEM]

ALKEM showed a bearish trend over the last 3 months. During this period ALKEM fell by -2.85% and saw a maximum drawdown of -5.95%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ALKEM till volatility reduces and a clear trend emerges.

Trend

ALKEM has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 17 May, 2016 to 27 Mar, 2017. Over the last 3 years and 1 month, ALKEM underperformed the NIFTY-50 index on 50% days. Which indicates that on days ALKEM underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

During the last three months ALKEM was mostly loss making and delivered on average -0.04% per day. It's best return during this period (of +2.59%) was on Monday, 12 Nov, 2018. While it's worst loss in the same period (of -1.77%) was on Wednesday, 16 Jan, 2019. The longest stort-term trend during this period was 6 losing days, which started on 21 Nov, 2018 and ended on 29 Nov, 2018. This bearish trend lost -2.83% of investor capital.

During the last year ALKEM had 6 profitable months and 6 loss making months. ALKEM returned profits in more months than NIFTY-50 index. ALKEM significantly outperformed NIFTY-50 index in Jul 2018, when it returned +14.83% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. ALKEM and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both ALKEM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

An investment in knowledge pays the best interest.
-- Benjamin Franklin

ALKEM is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in ALKEM's volatility from 19 Oct, 2018 to 11 Jan, 2019. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that ALKEM has significant negative skewness in it's return distribution. This indicates that ALKEM is very risky for short-term investment and can significantly underperform for long durations.

ALKEM has more chance of extreme outcomes than the NIFTY-50 index. Therefore, ALKEM must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than ALKEM.

Based on your interest in ALKEM you may find it interesting to know that LTTS and HATSUN are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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