Looking to invest in UNITEDBNK? Look for alternatives because it showed weakness
18 Jan, 201913 min read
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UNITED BANK OF INDIA delivered massive losses on Friday. It fell by -2.43% to close at 12.05. On a day when the overall market breadth was 71%, it closed higher than 14% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
UNITEDBNK showed a strong bullish trend over the last 3 months. During this period UNITEDBNK surged by +22.34% and saw a maximum drawdown of -18.37%. There were 3 long signals during this period that returned a cumulative of +6.63% to investors.
UNITEDBNK has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 7 Feb, 2017 to 28 Aug, 2018. Over the last 3 years and 1 month, UNITEDBNK underperformed the NIFTY-50 index on 55% days.
UNITEDBNK returned losses on 59% days in the last three months. During this time, it delivered on average +0.36% per day. It delivered it's best daily return of +10.82%, during this period, on Wednesday, 16 Jan, 2019. The longest stort-term trend during this period was 7 profitable days, which started on 2 Nov, 2018 and went on till 13 Nov, 2018. This bullish trend returned +10.93% to investors.
During the last year UNITEDBNK had 5 profitable months and 7 loss making months. Profitable number of months of UNITEDBNK and NIFTY-50 index were the same. UNITEDBNK significantly outperformed NIFTY-50 index in Dec 2018, when it returned +16.98% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. UNITEDBNK and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both UNITEDBNK 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
UNITEDBNK 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 surge in UNITEDBNK's volatility from 25 Oct, 2018 to 13 Nov, 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 UNITEDBNK has significant negative skewness in it's return distribution. This indicates that UNITEDBNK is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than UNITEDBNK. Therefore, NIFTY-50 must receive a lower allocation than UNITEDBNK in your portfolio. NIFTY-50 index usually has shorter drawdown period than UNITEDBNK.
Based on your interest in UNITEDBNK you may find it interesting to know that BRITANNIA and BAJFINANCE have both shown remarkable performance and deserve to be on every investors' watchlist.
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