Don't consider investing in PATELENG now, it is risky at the moment
23 Jan, 201913 min read
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PATEL ENGINEERING LTD. delivered lacklustre performance on Wednesday. It returned -0.9% to close at 32.95. On a day when the overall market breadth was 70%, it closed higher than 18% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0084%.
PATELENG showed a down trend over the last 3 months. During this period PATELENG returned -9.85% and saw a maximum drawdown of -24.25%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in PATELENG till volatility reduces and a clear trend emerges.
PATELENG has been underperforming the NIFTY-50 index in recent time, after having outperformed till 15 Sep, 2016. Over the last 3 years and 1 month, PATELENG underperformed the NIFTY-50 index on 57% days.
During the last three months PATELENG was mostly loss making and delivered on average -0.13% per day. It's best return during this period (of +7.52%) was on Tuesday, 18 Dec, 2018. While it's worst loss in the same period (of -8.05%) was on Friday, 16 Nov, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +10.52% to investors. This was followed by a bearish trend that started on 19 Dec, 2018 and ended on 26 Dec, 2018. This bearish trend lost -9.26% of investor capital.
On monthly basis, PATELENG delivered losses in more months over the last year, than profits. PATELENG delivered profits less regularly than NIFTY-50 index. PATELENG was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -30.41% compared to -6.42% returned by NIFTY-50 index in Sep 2018. PATELENG had a longer winning streak of losing months than NIFTY-50 index. It went down in 6 straight months (from Feb 2018 to Jul 2018) during which period it delivered -61.41%. It is interesting to note that both PATELENG and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"Infinite growth of material consumption in a finite world is an impossibility.
PATELENG 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 PATELENG's volatility from 16 Nov, 2018 to 16 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 PATELENG has significant negative skewness in it's return distribution. This indicates that PATELENG is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than PATELENG. Therefore, NIFTY-50 must receive a lower allocation than PATELENG in your portfolio. NIFTY-50 index usually has shorter drawdown period than PATELENG.
On a general note (since you are interested in PATELENG), if you are an investor in SRIPIPES, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.
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