219.85 -3.59 (-1.63%) Sell

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

13 min read

CROMPT GREA CON ELEC LTD has destroyed investor wealth on Wednesday. It returned -1.63% to close at 219.85. It is currently trading -17% below it's 52 week high of 266.9.

[Themes containing CROMPTON]

Buy-and-Hold investors in CROMPTON experienced a maximum drawdown of -7.08% over the last three months. It grew by +8.09% during this 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 +0.34%.


CROMPTON has been underperforming the NIFTY-50 index in recent time, after having outperformed till 4 Jan, 2018. Over the last 2 years and 8 months, CROMPTON outperformed the NIFTY-50 index on 51% days.

During the last three months CROMPTON was mostly profitable and delivered on average +0.13% per day. It's best return during this period (of +3.42%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -2.88%) was on Monday, 21 Jan, 2019. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +10.42% to investors. This was followed by a bearish trend that started on 9 Nov, 2018 and ended on 13 Nov, 2018. This bearish trend lost -4.11% of investor capital.

On monthly basis, CROMPTON delivered profits and losses in equal number of months. CROMPTON delivered profits in more months than NIFTY-50 index. CROMPTON was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -10.6% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CROMPTON and NIFTY-50 index, both had periods of 2 consecutive profitable months.

All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock .
-- Charles Thomas Munger

CROMPTON 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 CROMPTON'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 CROMPTON 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.

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

On a general note (since you are interested in CROMPTON), two large cap instruments that deserve special mention are TORNTPHARM and BAJFINANCE. They have significantly outperformed the overall market.

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