1176.15 -19.71 (-1.68%) Sell

CHOLAFIN is a falling knife, continues to bleed every investor trying to catch it

13 min read

CHOLAMANDALAM IN & FIN CO was among the worst performers today. It returned -1.68% to close at 1176.15. During the last week it returned -1.11% and saw a maximum drawdown of -1.68% before bouncing back.

[Themes containing CHOLAFIN]

Buy-and-Hold investors in CHOLAFIN experienced a maximum drawdown of -12.17% over the last three months. It grew by +5.61% during this up trending period. There were no long signals during this period. However, the short signal was not profitable and lost investors -5.61%.


CHOLAFIN has been underperforming the NIFTY-50 index in recent time, after having outperformed till 30 Apr, 2018. Over the last 3 years and 1 month, CHOLAFIN outperformed the NIFTY-50 index on 50% days. Which indicates that on days CHOLAFIN 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 CHOLAFIN delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +6.36%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -3.91%) was on Thursday, 6 Dec, 2018. There was initially a bullish trend during this period which started on 7 Nov, 2018 and went on till 13 Nov, 2018. The bullish trend returned +2.97% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -9.83% of investor capital.

On monthly basis, CHOLAFIN delivered losses in more months over the last year, than profits. CHOLAFIN delivered profits less regularly than NIFTY-50 index. CHOLAFIN was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -20.96% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CHOLAFIN had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -18.44%. It is interesting to note that both CHOLAFIN and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

If all the economists were laid end to end, they'd never reach a conclusion.
-- George Bernard Shaw

CHOLAFIN 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 CHOLAFIN's volatility from 19 Oct, 2018 to 17 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 CHOLAFIN 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 CHOLAFIN derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

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

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