NELCO investors treading cautiously as performance is muted

NELCO LTD ranked among the worst performers today. It lost -3.55% to close at 275.65. During the last week it lost -4.77% and saw a maximum drawdown of -6.38% before bouncing back.

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Buy-and-Hold investors in NELCO experienced a maximum drawdown of -16.15% over the last three months. It returned +14.71% during this strong up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +14.26%.

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NELCO has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, NELCO outperformed the NIFTY-50 index on 44% days. Which indicates that on days NELCO 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 NELCO delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +5.0%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -4.99%) was on Monday, 22 Oct, 2018. There was initially a bearish trend during this period which started on 19 Dec, 2018 and went on till 27 Dec, 2018. The trend delivered -9.22% losses to investors. This was followed by a bullish trend that started on 28 Dec, 2018 and ended on 3 Jan, 2019. This bullish trend delivered +18.65% to investors.

NELCO had 8 profitable and 4 loss making months over the last year. NELCO was profitable in more months than NIFTY-50 index. NELCO significantly outperformed NIFTY-50 index in Feb 2018, when it returned +47.45% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. NELCO and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both NELCO and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Believe you can and you're halfway there.
-- Theodore Roosevelt

NELCO 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 surge in NELCO's volatility from 19 Oct, 2018 to 25 Oct, 2018. 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 NELCO has significant negative skewness in it's return distribution. This indicates that NELCO is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in NELCO), two large cap instruments that deserve special mention are INFY and BRITANNIA. They have significantly outperformed the overall market.