UCAL FUEL SYSTEMS LTD

173.9 +1.97 (+1.13%) Sell

Don't go profit booking on UCALFUEL now, it delivered a decent return

13 min read

UCAL FUEL SYSTEMS LTD managed to outperform the broader market on Wednesday. It surged by +1.13% to close at 173.9. It is currently trading -42% below it's 52 week high of 300.25.

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UCALFUEL showed a bearish trend over the last 3 months. During this period UCALFUEL fell by -5.57% and saw a maximum drawdown of -13.2%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in UCALFUEL till volatility reduces and a clear trend emerges.

Trend

UCALFUEL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 21 Mar, 2016 to 12 Jan, 2018. Over the last 3 years and 1 month, UCALFUEL outperformed the NIFTY-50 index on 46% days. Which indicates that on days UCALFUEL outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

UCALFUEL returned losses on 56% days in the last three months. During this time, it delivered on average -0.08% per day. It delivered it's worst daily return of -4.1%, during this period, on Monday, 5 Nov, 2018. The longest stort-term trend during this period was 6 losing days, which started on 3 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -6.03% of investor capital.

During the last year UCALFUEL had 4 profitable months and 8 loss making months. Profitable number of months of UCALFUEL and NIFTY-50 index were the same. UCALFUEL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Jun 2018, returned -21.23% compared to -6.42% returned by NIFTY-50 index in Sep 2018. UCALFUEL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered -8.24%. It is interesting to note that both UCALFUEL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
-- Robert G. Allen

UCALFUEL 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 UCALFUEL's volatility from 5 Nov, 2018 to 7 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 UCALFUEL has significant negative skewness in it's return distribution. This indicates that UCALFUEL is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in UCALFUEL you may find it interesting to know that BRITANNIA has shown remarkable performance and deserves to be on every investors' watchlist.

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