KEI shows sign of weakness as investors do cost averaging

KEI performed better than the broader market today. On a longer term basis, investors in KEI INDUSTRIES LTD. made +0.29% per day. Friday's performance of +0.21% was a significant outperformance compared to it's daily average.

[Themes containing KEI]

Buy-and-Hold investors in KEI experienced a maximum drawdown of -12.02% over the last three months. It returned +33.45% during this strong up trending period. There were no long signals during this period. However, the short signal incurred a significant loss, losing -33.45% of investors' capital.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

KEI has been underperforming the NIFTY-50 index in recent time, after having outperformed till 23 May, 2018. Over the last 3 years and 1 month, KEI outperformed the NIFTY-50 index on 49% days. Which indicates that on days KEI 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 KEI delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +13.45%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -5.62%) was on Thursday, 6 Dec, 2018. There was initially a bullish trend during this period which started on 24 Oct, 2018 and went on till 5 Nov, 2018. The bullish trend returned +42.2% to investors. This was followed by a bearish trend that started on 14 Nov, 2018 and ended on 22 Nov, 2018. This bearish trend lost -12.67% of investor capital.

On monthly basis, KEI delivered profits and losses in equal number of months. KEI delivered profits in more months than NIFTY-50 index. KEI was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -17.62% compared to -6.42% returned by NIFTY-50 index in Sep 2018. KEI had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -38.12%. It is interesting to note that both KEI and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"Buy not on optimism, but on arithmetic.

KEI is becoming less 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 KEI's volatility from 22 Oct, 2018 to 18 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 KEI has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

On a general note (since you are interested in KEI), three small cap instruments that deserve special mention are VINATIORGA, ASTRAZEN and NIITTECH. They have all outperformed the market and must be closely watched for investment opportunities.