RENAISSANCE JEWEL. LTD.

307.35 -1.2 (-0.39%) Buy

Don't go shopping for RJL now, it is underperforming the market

13 min read

RJL trailed the broader market today. On a longer term basis, investors in RENAISSANCE JEWEL. LTD. made +0.2% per day. Friday's performance of -0.39% was a underperformance compared to it's daily average.

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RJL showed a strong bullish trend over the last 3 months. During this period RJL increased by +10.68% and saw a maximum drawdown of -7.59%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in RJL till volatility reduces and a clear trend emerges.

Trend

RJL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 15 Jun, 2016 to 15 Feb, 2018. Over the last 3 years and 1 month, RJL outperformed the NIFTY-50 index on 47% days. Which indicates that on days RJL 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 RJL delivered losses on 54% days. However, it still managed to end this period in a profit. It's best return during this period (of +13.78%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -3.38%) was on Thursday, 25 Oct, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 11 Dec, 2018 and went on till 17 Dec, 2018. This bullish trend returned +3.2% to investors.

The last 12 months saw RJL's investors making profits in 6 months and incurring losses in 6 months. During the last year, RJL delivered profits in more months than NIFTY-50 index. RJL significantly outperformed NIFTY-50 index in Aug 2018, when it returned +19.12% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. RJL 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 +15.44%.

There's more honor in investment management than in investment banking.
-- Charlie Munger

RJL 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 RJL's volatility from 19 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 RJL has significant negative skewness in it's return distribution. This indicates that RJL is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in RJL you may find it interesting to know that IGARASHI, NIITTECH and VINATIORGA are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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