146.25 -3.51 (-2.4%) Buy

ELECTHERM investors herd to book profits while the going is good

13 min read

ELECTROTHERM (I) LTD. ranked among the worst performers on Wednesday. It returned -2.4% to close at 146.25. On a day when the overall market breadth was 70%, it closed higher than 92% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0084%.

[Themes containing ELECTHERM]

Buy-and-Hold investors in ELECTHERM experienced a maximum drawdown of -12.35% over the last three months. It returned -1.48% during this down trending period. There were both Long and Short signals during this period, where the short signals were marginally more profitable than the long signals.


ELECTHERM has been underperforming the NIFTY-50 index in recent time, after having outperformed till 26 May, 2017. Over the last 3 years and 1 month, ELECTHERM outperformed the NIFTY-50 index on 45% days. Which indicates that on days ELECTHERM outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

During the last three months ELECTHERM was mostly loss making and delivered on average -0.01% per day. It's best return during this period (of +8.2%) was on Monday, 12 Nov, 2018. While it's worst loss in the same period (of -3.95%) was on Wednesday, 28 Nov, 2018. There was initially a bullish trend during this period which started on 12 Nov, 2018 and went on till 15 Nov, 2018. The bullish trend returned +11.42% to investors. This was followed by a bearish trend that started on 26 Nov, 2018 and ended on 29 Nov, 2018. This bearish trend lost -5.56% of investor capital.

On monthly basis, ELECTHERM delivered losses in more months over the last year, than profits. ELECTHERM delivered profits in more months than NIFTY-50 index. ELECTHERM significantly outperformed NIFTY-50 index in Aug 2018, when it returned +24.47% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. ELECTHERM and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both ELECTHERM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.
-- Edmund Burke

ELECTHERM is becoming more 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 ELECTHERM's volatility from 31 Oct, 2018 to 10 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 ELECTHERM has significant negative skewness in it's return distribution. This indicates that ELECTHERM is very risky for short-term investment and can significantly underperform for long durations.

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

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

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