263.1 -3.06 (-1.16%) Sell

Search for alternative investments is on for CHENNPETRO investors as it underperforms broader market

13 min read

CHENNAI PETROLEUM CORP LT underperformed on Friday. It lost -1.16% to close at 263.1. It is currently trading -40% below it's 52 week high of 442.3.

[Themes containing CHENNPETRO]

CHENNPETRO is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for CHENNPETRO's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -0.81%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to CHENNPETRO.


CHENNPETRO has been underperforming the NIFTY-50 index in recent time, after having outperformed till 31 Oct, 2017. Over the last 3 years and 1 month, CHENNPETRO outperformed the NIFTY-50 index on 49% days. Which indicates that on days CHENNPETRO outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

During the last three months CHENNPETRO delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +5.53%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -4.11%) was on Tuesday, 30 Oct, 2018. There was initially a bearish trend during this period which started on 16 Nov, 2018 and went on till 22 Nov, 2018. The trend delivered -5.97% losses to investors. This was followed by a bullish trend that started on 26 Nov, 2018 and ended on 29 Nov, 2018. This bullish trend delivered +7.97% to investors.

CHENNPETRO had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of CHENNPETRO and NIFTY-50 index were the same. CHENNPETRO was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -12.44% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CHENNPETRO had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -38.49%.

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CHENNPETRO 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 CHENNPETRO's volatility from 19 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 CHENNPETRO has significant negative skewness in it's return distribution. This indicates that CHENNPETRO is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in CHENNPETRO), three instruments that deserve special mention are RESPONIND, IGARASHI and LTTS. They have all outperformed the market and must be closely watched for investment opportunities.

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