M&M shows sign of weakness as investors do cost averaging
18 Dec, 201814 min read
Share with friends 
MAHINDRA & MAHINDRA LTD ranked better than it's peers on Tuesday. It delivered +1.93% to close at 770.95. It is currently trading -21% below it's 52 week high of 983.85.
Buy-and-Hold investors in M&M experienced a maximum drawdown of -25.98% over the last three months. It fell by -18.75% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +10.45%.
M&M has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 3 Nov, 2017 to 21 Sep, 2018. Over the last 2 years and 12 months, M&M underperformed the NIFTY-50 index on 51% days.
During the last three months M&M was mostly loss making and delivered on average -0.32% per day. It's best return during this period (of +5.25%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -6.65%) was on Monday, 24 Sep, 2018. The longest stort-term trend during this period was 4 losing days, which started on 27 Sep, 2018 and ended on 3 Oct, 2018. This bearish trend lost -11.82% of investor capital.
During the last year M&M had 7 profitable months and 5 loss making months. M&M returned profits in more months than NIFTY-50 index. M&M significantly outperformed NIFTY-50 index in Apr 2018, when it returned +16.91% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. M&M had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Mar 2018 to May 2018) during which period it delivered +24.1%. It is interesting to note that both M&M and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
You must gain control over your money or the lack of it will forever control you.
-- Dave Ramsey
M&M 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 M&M's volatility from 21 Sep, 2018 to 28 Nov, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.
Advanced/professional short-term investors should note that M&M 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.
Investors trading in M&M derivatives at this moment can consider 'Married Put' options strategy to receive better risk-adjusted returns.
M&M has more chance of extreme outcomes than the NIFTY-50 index. Therefore, M&M must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than M&M.
Based on your interest in M&M you may find it interesting to know that ~FOODPROCESSING has delivered similar performance as M&M and can be considered as an alternative investment candidate (to M&M).
... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.
All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.
We want to empower investors with all the tools and analysis required by them to make a rational investment decision.
If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute