PRECISION WIRES INDIA LTD

221.7 -2.13 (-0.96%) Sell

Search for alternative investments is on for PRECWIRE investors as it underperforms broader market

15 min read

PRECISION WIRES INDIA LTD trailed the broader market today. It delivered -0.96% to close at 221.7. During the last week it delivered -3.31% and saw a maximum drawdown of -3.31%.

[Themes containing PRECWIRE]

Buy-and-Hold investors in PRECWIRE experienced a maximum drawdown of -12.82% over the last three months. It surged by +14.28% during this strong bullish trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.

Trend

PRECWIRE has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 29 Mar, 2016 to 14 Feb, 2018. Over the last 3 years and 1 month, PRECWIRE outperformed the NIFTY-50 index on 46% days. Which indicates that on days PRECWIRE outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

PRECWIRE was profitable on 50% days in the last three months. During this time, it delivered on average +0.24% per day. It delivered it's best daily return of +5.79%, during this period, on Tuesday, 6 Nov, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 26 Oct, 2018 and went on till 7 Nov, 2018. This bullish trend returned +23.6% to investors.

The last 12 months saw PRECWIRE's investors making profits in 6 months and incurring losses in 6 months. During the last year, PRECWIRE delivered profits in more months than NIFTY-50 index. PRECWIRE significantly outperformed NIFTY-50 index in Feb 2018, when it returned +18.8% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. PRECWIRE had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered +16.28%. It is interesting to note that both PRECWIRE and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

My old father used to have a saying: If you make a bad bargain, hug it all the tighter.
-- Abraham Lincoln

PRECWIRE 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 PRECWIRE's volatility from 25 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 PRECWIRE has significant negative skewness in it's return distribution. This indicates that PRECWIRE is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in PRECWIRE you may find it interesting to know that PPAP, COSMOFILMS and IBULHSGFIN have all performed similar to PRECWIRE and qualify as alternative investment candidates that must be evaluated for diversification.

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