UNITED BREWERIES LTD is looking better than most other alternatives on Friday. It grew by +0.3% to close at 1414.8. It is currently trading +50% above it's 52 week low of 939.85 and is down only -1% from it's 52 week high.
UBL showed a strong up trend over the last 3 months. During this period UBL grew by +19.37% and saw a maximum drawdown of -8.55%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in UBL till volatility reduces and a clear trend emerges.
UBL has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, UBL outperformed the NIFTY-50 index on 50% days. Which indicates that on days UBL 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 UBL was mostly profitable and delivered on average +0.29% per day. It's best return during this period (of +5.59%) was on Tuesday, 18 Dec, 2018. While it's worst loss in the same period (of -4.21%) was on Friday, 26 Oct, 2018. There was initially a bullish trend during this period which started on 7 Nov, 2018 and went on till 19 Nov, 2018. The bullish trend returned +5.42% to investors. This was followed by a bearish trend that started on 22 Nov, 2018 and ended on 29 Nov, 2018. This bearish trend lost -6.49% of investor capital.
UBL had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of UBL and NIFTY-50 index were the same. UBL significantly outperformed NIFTY-50 index in Aug 2018, when it returned +28.77% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. UBL had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered +15.45%. It is interesting to note that both UBL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.
UBL 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 UBL's volatility from 31 Oct, 2018 to 14 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 UBL has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in UBL derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.
NIFTY-50 index has more chance of extreme outcomes than UBL. Therefore, NIFTY-50 must receive a lower allocation than UBL in your portfolio. NIFTY-50 index usually has shorter drawdown period than UBL.
On a general note (since you are interested in UBL), three small cap instruments that deserve special mention are IGARASHI, NIITTECH and ASTRAZEN. They have all outperformed the market and must be closely watched for investment opportunities.
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