Don't consider buying GUJGASLTD now, it is risky at the moment
18 Jan, 201913 min read
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GUJARAT GAS LIMITED significantly underperformed on Friday. It lost -3.09% to close at 136.45. It is currently trading -24% below it's 52 week high of 180.63.
GUJGASLTD showed a up trend over the last 3 months. During this period GUJGASLTD returned +5.87% and saw a maximum drawdown of -5.24%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in GUJGASLTD till volatility reduces and a clear trend emerges.
GUJGASLTD has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, GUJGASLTD underperformed the NIFTY-50 index on 53% days.
During the last three months GUJGASLTD was mostly profitable and delivered on average +0.1% per day. It's best return during this period (of +7.06%) was on Tuesday, 15 Jan, 2019. While it's worst loss in the same period (of -3.09%) was on Friday, 18 Jan, 2019. There was initially a bullish trend during this period which started on 26 Nov, 2018 and went on till 30 Nov, 2018. The bullish trend returned +3.83% to investors. This was followed by a bearish trend that started on 3 Dec, 2018 and ended on 6 Dec, 2018. This bearish trend lost -1.89% of investor capital.
GUJGASLTD had 7 profitable and 5 loss making months over the last year. GUJGASLTD was profitable in more months than NIFTY-50 index. GUJGASLTD was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -18.32% compared to -6.42% returned by NIFTY-50 index in Sep 2018. GUJGASLTD had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Oct 2018 to Jan 2019) during which period it delivered +8.49%. It is interesting to note that both GUJGASLTD and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know I am a net loser.
-- Charles Schwab
GUJGASLTD 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 GUJGASLTD's volatility from 19 Oct, 2018 to 14 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 GUJGASLTD has significant negative skewness in it's return distribution. This indicates that GUJGASLTD is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than GUJGASLTD. Therefore, NIFTY-50 must receive a lower allocation than GUJGASLTD in your portfolio. NIFTY-50 index usually has shorter drawdown period than GUJGASLTD.
On a general note (since you are interested in GUJGASLTD), two mid cap instruments that deserve special mention are CUB and BATAINDIA. They have significantly outperformed the overall market.
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