272.6 -2.82 (-1.03%) Sell

Stop-loss on the minds of CANBK investors as it underperforms

13 min read

CANARA BANK ranked worse than it's peers today. It returned -1.03% to close at 272.6. During the last week it returned -1.94% and saw a maximum drawdown of -1.94%.

[Themes containing CANBK]

Buy-and-Hold investors in CANBK experienced a maximum drawdown of -9.89% over the last three months. It grew by +23.35% during this strong up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +7.85%.


CANBK has been underperforming the NIFTY-50 index in recent time, after having outperformed till 25 Oct, 2017. Over the last 3 years and 1 month, CANBK underperformed the NIFTY-50 index on 52% days.

During the last three months CANBK was mostly profitable and delivered on average +0.37% per day. It's best return during this period (of +12.07%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -4.39%) was on Monday, 22 Oct, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 31 Oct, 2018. The bullish trend returned +22.3% to investors. This was followed by a bearish trend that started on 28 Nov, 2018 and ended on 30 Nov, 2018. This bearish trend lost -4.45% of investor capital.

On monthly basis, CANBK delivered losses in more months over the last year, than profits. CANBK delivered profits less regularly than NIFTY-50 index. CANBK was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -22.15% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CANBK and NIFTY-50 index, both had periods of 2 consecutive losing months. It is interesting to note that both CANBK and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger

CANBK is becoming less volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in CANBK's volatility from 30 Oct, 2018 to 18 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 CANBK has significant negative skewness in it's return distribution. This indicates that CANBK is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in CANBK derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in CANBK), two instruments that have been extremely volatile in recent times are TIDEWATER and IEX. Investors in these instruments should consider reducing their exposure (to TIDEWATER and IEX) and diversifying their portfolios.

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