1232.1 -0.7 (-0.06%) Sell

Search for alternative investments is on for CEATLTD investors as it underperforms

13 min read

CEATLTD delivered lacklustre performance today. On a longer term basis, investors in CEAT LIMITED made +0.11% per day. Friday's performance of -0.06% was a significant underperformance compared to it's daily average.

[Themes containing CEATLTD]

Buy-and-Hold investors in CEATLTD experienced a maximum drawdown of -8.9% over the last three months. It gained +11.84% 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 +4.4%.


CEATLTD has been underperforming the NIFTY-50 index in recent time, after having outperformed till 12 Jun, 2017. Over the last 3 years and 1 month, CEATLTD underperformed the NIFTY-50 index on 51% days.

CEATLTD returned losses on 51% days in the last three months. During this time, it delivered on average +0.2% per day. It delivered it's best daily return of +8.86%, during this period, on Friday, 26 Oct, 2018. There was initially a bearish trend during this period which started on 5 Dec, 2018 and went on till 10 Dec, 2018. The trend delivered -2.4% losses to investors. This was followed by a bullish trend that started on 14 Dec, 2018 and ended on 20 Dec, 2018. This bullish trend delivered +4.2% to investors.

CEATLTD had 6 profitable and 6 loss making months over the last year. CEATLTD was profitable in more months than NIFTY-50 index. CEATLTD was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -17.7% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CEATLTD had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered +14.75%. It is interesting to note that both CEATLTD and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Wealth after all is a relative thing since he that has little and wants less is richer than he that has much and wants more.
-- Charles Caleb Colton

CEATLTD 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 CEATLTD's volatility from 26 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 CEATLTD has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in CEATLTD 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 CEATLTD. Therefore, NIFTY-50 must receive a lower allocation than CEATLTD in your portfolio. NIFTY-50 index usually has shorter drawdown period than CEATLTD.

On a general note (since you are interested in CEATLTD), two instruments that deserve special mention are NIITTECH and CUB. They have significantly outperformed the overall market this year.

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