Stop-loss on the minds of EIHOTEL investors as it underperforms

EIH LIMITED delivered lacklustre performance on Friday. It delivered -1.02% to close at 180.25. On a day when the overall market breadth was 71%, it closed higher than 60% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

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Buy-and-Hold investors in EIHOTEL experienced a maximum drawdown of -10.9% over the last three months. It delivered +14.88% during this strong bullish 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 +18.27%.

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EIHOTEL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 21 Feb, 2017 to 16 Jan, 2018. Over the last 3 years and 1 month, EIHOTEL underperformed the NIFTY-50 index on 52% days.

During the last three months EIHOTEL delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +7.09%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -3.6%) was on Wednesday, 2 Jan, 2019. The longest stort-term trend during this period was 6 profitable days, which started on 22 Nov, 2018 and went on till 30 Nov, 2018. This bullish trend returned +15.44% to investors.

The last 12 months saw EIHOTEL's investors making profits in 7 months and incurring losses in 5 months. During the last year, EIHOTEL delivered profits in more months than NIFTY-50 index. EIHOTEL significantly outperformed NIFTY-50 index in Nov 2018, when it returned +20.44% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. EIHOTEL had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered +30.03%. It is interesting to note that both EIHOTEL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Money is multiplied in practical value depending on the number of W's you control in your life: what you do, when you do it, where you do it, and with whom you do it.
-- Timothy Ferriss

EIHOTEL is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in EIHOTEL's volatility from 12 Dec, 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 EIHOTEL has significant negative skewness in it's return distribution. This indicates that EIHOTEL is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in EIHOTEL you may find it interesting to know that YESBANK, ~REFINERIES and NRBBEARING have all performed similar to EIHOTEL and qualify as alternative investment candidates that must be evaluated for diversification.