NESCO LTD. showed weakness on Friday. It fell by -0.06% to close at 451.15. On a day when the overall market breadth was 71%, it closed higher than 48% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
NESCO showed a flat trend over the last 3 months. During this period NESCO delivered +1.0% and saw a maximum drawdown of -6.87%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in NESCO till volatility reduces and a clear trend emerges.
NESCO has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 8 Aug, 2016 to 16 Jan, 2018. Over the last 3 years and 1 month, NESCO underperformed the NIFTY-50 index on 50% days. Which indicates that on days NESCO underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.
NESCO returned losses on 51% days in the last three months. During this time, it delivered on average +0.03% per day. It delivered it's best daily return of +5.59%, during this period, on Monday, 5 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 14 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -6.46% of investor capital.
During the last year NESCO had 5 profitable months and 7 loss making months. Profitable number of months of NESCO and NIFTY-50 index were the same. NESCO was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -12.23% compared to -6.42% returned by NIFTY-50 index in Sep 2018. NESCO and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both NESCO and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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NESCO 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 NESCO's volatility from 19 Oct, 2018 to 4 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 NESCO has significant negative skewness in it's return distribution. This indicates that NESCO is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than NESCO. Therefore, NIFTY-50 must receive a lower allocation than NESCO in your portfolio. NIFTY-50 index usually has shorter drawdown period than NESCO.
Based on your interest in NESCO you may find it interesting to know that PDSMFL has delivered similar performance as NESCO and can be considered as an alternative investment candidate (to NESCO).
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