Don't lose faith in ROHLTD now, it delivered good returns

ROYAL ORCHID HOTELS LTD showed marginal outperformance today. It increased by +0.9% to close at 118.25. It's recent 5 day performance has been -2.25%, -3.62%, +0.48%, -2.6% and -0.78%.

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ROHLTD showed a bullish trend over the last 3 months. During this period ROHLTD increased by +6.77% and saw a maximum drawdown of -13.95%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ROHLTD till volatility reduces and a clear trend emerges.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

ROHLTD has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 12 Sep, 2016 to 7 May, 2018. Over the last 3 years and 1 month, ROHLTD outperformed the NIFTY-50 index on 46% days. Which indicates that on days ROHLTD 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 ROHLTD delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +11.7%) was on Thursday, 29 Nov, 2018. While it's worst loss in the same period (of -4.43%) was on Monday, 12 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +3.47%) started on 4 Jan, 2019 and went on till 10 Jan, 2019 while the bearish trend (which returned -11.9%) started on 30 Nov, 2018 and went on till 6 Dec, 2018.

During the last year ROHLTD had 4 profitable months and 8 loss making months. Profitable number of months of ROHLTD and NIFTY-50 index were the same. ROHLTD significantly outperformed NIFTY-50 index in Apr 2018, when it returned +32.83% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. ROHLTD had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -33.11%. It is interesting to note that both ROHLTD and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

The hardest thing to understand in the world is the income tax.
-- Albert Einstein

ROHLTD 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 surge in ROHLTD's volatility from 21 Nov, 2018 to 18 Dec, 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 ROHLTD has significant negative skewness in it's return distribution. This indicates that ROHLTD is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in ROHLTD you may find it interesting to know that LTTS is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.