DEWAN HOUSING FIN CORP LT is a falling knife that can bleed you if you catch it on Friday. It lost -1.71% to close at 216.05. On a day when the overall market breadth was 71%, it closed higher than 53% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
DHFL is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for DHFL's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned +2.61%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to DHFL.
DHFL has been underperforming the NIFTY-50 index in recent time, after having outperformed till 3 Nov, 2017. Over the last 3 years and 1 month, DHFL underperformed the NIFTY-50 index on 49% days. Which indicates that on days DHFL underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.
During the last three months DHFL delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +11.83%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -10.52%) was on Monday, 22 Oct, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 1 Nov, 2018. The bullish trend returned +24.13% to investors. This was followed by a bearish trend that started on 22 Nov, 2018 and ended on 29 Nov, 2018. This bearish trend lost -15.71% of investor capital.
DHFL had 4 profitable and 8 loss making months over the last year. During the last year, DHFL underperformed NIFTY-50 index on monthly return basis. DHFL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -58.82% compared to -6.42% returned by NIFTY-50 index in Sep 2018. DHFL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -93.63%.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.
-- William A. Ward
DHFL 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 DHFL's volatility from 19 Oct, 2018 to 15 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 DHFL has significant positive skewness in it's return distribution. This indicates that investors can expect DHFL to recover from drawdowns quickly. Which makes DHFL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in DHFL 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 DHFL. Therefore, NIFTY-50 must receive a lower allocation than DHFL in your portfolio. DHFL usually has shorter drawdown period than the NIFTY-50 index.
On a general note (since you are interested in DHFL), 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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