Are you evaluating investing in DCBBANK? Wait as it underperformed broader market
18 Jan, 201913 min read
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DCB BANK LIMITED underperformed broader market on Friday. It lost -0.4% to close at 185.55. It is currently trading +29% above it's 52 week low of 143.1 and is down only -8% from it's 52 week high.
DCBBANK showed a strong up trend over the last 3 months. During this period DCBBANK gained +17.47% and saw a maximum drawdown of -9.64%. There was a long signal during this period which returned +12.76%.
DCBBANK has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, DCBBANK outperformed the NIFTY-50 index on 51% days.
DCBBANK was profitable on 52% days in the last three months. During this time, it delivered on average +0.27% per day. It delivered it's worst daily return of -4.92%, during this period, on Monday, 12 Nov, 2018. There was initially a bearish trend during this period which started on 22 Nov, 2018 and went on till 28 Nov, 2018. The trend delivered -2.67% losses to investors. This was followed by a bullish trend that started on 4 Jan, 2019 and ended on 15 Jan, 2019. This bullish trend delivered +8.42% to investors.
DCBBANK had 6 profitable and 6 loss making months over the last year. DCBBANK was profitable in more months than NIFTY-50 index. DCBBANK significantly outperformed NIFTY-50 index in Apr 2018, when it returned +19.42% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. DCBBANK and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both DCBBANK and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.
-- Peter Lynch.
DCBBANK 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 DCBBANK's volatility from 22 Oct, 2018 to 29 Nov, 2018. 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 DCBBANK has significant positive skewness in it's return distribution. This indicates that investors can expect DCBBANK to recover from drawdowns quickly. Which makes DCBBANK a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in DCBBANK derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.
NIFTY-50 index has more chance of extreme outcomes than DCBBANK. Therefore, NIFTY-50 must receive a lower allocation than DCBBANK in your portfolio. DCBBANK usually has shorter drawdown period than the NIFTY-50 index.
On a general note (since you are interested in DCBBANK), two instruments that deserve special mention are RESPONIND and LTTS. They have significantly outperformed the overall market this year.
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