509.4 -0.2 (-0.04%) Sell

CIPLA investors doing a reality check

13 min read

CIPLA LTD trailed the broader market today. It lost -0.04% to close at 509.4. During the last week it lost -0.5% and saw a maximum drawdown of -1.08% before bouncing back.

[Themes containing CIPLA]

Buy-and-Hold investors in CIPLA experienced a maximum drawdown of -19.8% over the last three months. It lost -19.63% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +19.63% for investors.


CIPLA has been underperforming the NIFTY-50 index in recent time, after having outperformed till 6 Jan, 2016. CIPLA is currently at it's worst performance to the NIFTY-50 index and therefore does not make a good investment candidate. Over the last 3 years and 1 month, CIPLA underperformed the NIFTY-50 index on 55% days.

During the last three months CIPLA was mostly loss making and delivered on average -0.33% per day. It's best return during this period (of +5.21%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -7.26%) was on Monday, 5 Nov, 2018. There was initially a bearish trend during this period which started on 22 Oct, 2018 and went on till 26 Oct, 2018. The trend delivered -4.83% losses to investors. This was followed by a bullish trend that started on 29 Nov, 2018 and ended on 30 Nov, 2018. This bullish trend delivered +4.9% to investors.

CIPLA had 4 profitable and 8 loss making months over the last year. During the last year, CIPLA underperformed NIFTY-50 index on monthly return basis. CIPLA significantly outperformed NIFTY-50 index in Jun 2018, when it returned +17.6% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. CIPLA had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Sep 2018 to Jan 2019) during which period it delivered -24.97%. It is interesting to note that both CIPLA and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Never spend your money before you have it.
-- Thomas Jefferson

CIPLA 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 CIPLA's volatility from 6 Nov, 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 CIPLA has significant negative skewness in it's return distribution. This indicates that CIPLA is very risky for short-term investment and can significantly underperform for long durations.

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

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

On a general note (since you are interested in CIPLA), TORNTPHARM is a large cap that deserves to be closely tracked for investment opportunities.

Want to improve your Portfolio's performance?

Spotalpha's Portfolio optimizer is all you need to improve your returns and reduce your risk.
Optimize Portfolio NOW
If you liked what you read here ...

... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.

All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.

We want to empower investors with all the tools and analysis required by them to make a rational investment decision.

If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute
Share with friends   WhatsApp   Facebook   Twitter