Stop-loss on the minds of GRAPHITE investors as it ranked among the worst performers
18 Jan, 201913 min read
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GRAPHITE INDIA LTD delivered massive losses today. It lost -4.12% to close at 699.75. During the last week it lost -1.12% and saw a maximum drawdown of -7.08% before bouncing back.
Buy-and-Hold investors in GRAPHITE experienced a maximum drawdown of -31.51% over the last three months. It lost -31.12% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +31.12% for investors.
GRAPHITE has been underperforming the NIFTY-50 index in recent time, after having outperformed till 16 Aug, 2018. Over the last 3 years and 1 month, GRAPHITE outperformed the NIFTY-50 index on 51% days.
GRAPHITE returned losses on 69% days in the last three months. During this time, it delivered on average -0.57% per day. It delivered it's best daily return of +8.24%, during this period, on Wednesday, 16 Jan, 2019. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 30 Oct, 2018. The bullish trend returned +4.8% to investors. This was followed by a bearish trend that started on 28 Dec, 2018 and ended on 8 Jan, 2019. This bearish trend lost -7.16% of investor capital.
GRAPHITE had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of GRAPHITE and NIFTY-50 index were the same. GRAPHITE significantly outperformed NIFTY-50 index in May 2018, when it returned +28.68% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. GRAPHITE and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both GRAPHITE and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich.
GRAPHITE 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 GRAPHITE's volatility from 19 Oct, 2018 to 22 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 GRAPHITE has significant negative skewness in it's return distribution. This indicates that GRAPHITE is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than GRAPHITE. Therefore, NIFTY-50 must receive a lower allocation than GRAPHITE in your portfolio. NIFTY-50 index usually has shorter drawdown period than GRAPHITE.
On a general note (since you are interested in GRAPHITE), if you are an investor in HATSUN, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.
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