Don't buy HEIDELBERG now, it is underperforming the market

HEIDELBERGCEMENT (I) LTD trailed the broader market on Friday. It fell by -0.23% to close at 151.65. On a day when the overall market breadth was 71%, it closed higher than 71% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

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HEIDELBERG showed a bullish trend over the last 3 months. During this period HEIDELBERG delivered +9.53% and saw a maximum drawdown of -11.48%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in HEIDELBERG till volatility reduces and a clear trend emerges.

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Monthly Performance

Alpha (outperformance)

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HEIDELBERG has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 17 Feb, 2016 to 16 Jan, 2018. Over the last 3 years and 1 month, HEIDELBERG outperformed the NIFTY-50 index on 47% days. Which indicates that on days HEIDELBERG 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 HEIDELBERG delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +6.24%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -7.44%) was on Monday, 22 Oct, 2018. The longest stort-term trend during this period was 8 losing days, which started on 12 Nov, 2018 and ended on 21 Nov, 2018. This bearish trend lost -7.37% of investor capital.

During the last year HEIDELBERG had 7 profitable months and 5 loss making months. HEIDELBERG returned profits in more months than NIFTY-50 index. HEIDELBERG significantly outperformed NIFTY-50 index in Jul 2018, when it returned +16.17% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. HEIDELBERG had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered +7.21%. It is interesting to note that both HEIDELBERG and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

When you stop chasing the wrong things you give the right things a chance to catch you.
-- Lolly Daskal

HEIDELBERG 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 HEIDELBERG's volatility from 19 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 HEIDELBERG has significant negative skewness in it's return distribution. This indicates that HEIDELBERG is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in HEIDELBERG you may find it interesting to know that HATSUN is highly volatile and investors investing in it must take extreme caution. Consider either reducing your exposure to HATSUN or sufficiently diversifying your portfolio.