HEG shows sign of weakness as investors do cost averaging
23 Jan, 201913 min read
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HEG LTD ranked better than it's peers on Wednesday. It delivered +0.99% to close at 3275.45. On a day when the overall market breadth was 70%, it closed higher than 96% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0084%.
HEG is currently in a bearish trend. The current bearish signal has generated a profit of +16.05% for investors in the last three months.
HEG has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 26 Feb, 2016 to 16 Oct, 2018. Over the last 3 years and 1 month, HEG outperformed the NIFTY-50 index on 49% days. Which indicates that on days HEG 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 HEG was mostly loss making and delivered on average -0.31% per day. It's best return during this period (of +4.05%) was on Wednesday, 16 Jan, 2019. While it's worst loss in the same period (of -5.55%) was on Monday, 24 Dec, 2018. The longest stort-term trend during this period was 8 losing days, which started on 14 Dec, 2018 and ended on 26 Dec, 2018. This bearish trend lost -12.28% of investor capital.
During the last year HEG had 5 profitable months and 7 loss making months. HEG returned profits in more months than NIFTY-50 index. HEG significantly outperformed NIFTY-50 index in Oct 2018, when it returned +27.57% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. HEG had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered -25.1%. It is interesting to note that both HEG and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
The challenge is not to pick the best investment. The challenge is to pick the right investment.
-- Don Connelly
HEG is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in HEG's volatility from 25 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 HEG has significant negative skewness in it's return distribution. This indicates that HEG is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than HEG. Therefore, NIFTY-50 must receive a lower allocation than HEG in your portfolio. NIFTY-50 index usually has shorter drawdown period than HEG.
Based on your interest in HEG you may find it interesting to know that TIDEWATER, SRIPIPES and IGARASHI are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.
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