Stop-loss on the minds of UPL investors as it shows weakness

UPL LIMITED underperformed broader market today. It returned -0.39% to close at 766.05. During the last week it returned -0.56% and saw a maximum drawdown of -1.28% before bouncing back.

[Themes containing UPL]

Buy-and-Hold investors in UPL experienced a maximum drawdown of -6.97% over the last three months. It grew by +18.89% during this strong up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +6.87%.

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UPL has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, UPL outperformed the NIFTY-50 index on 49% days. Which indicates that on days UPL 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 UPL was mostly profitable and delivered on average +0.3% per day. It's best return during this period (of +5.9%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.46%) was on Friday, 21 Dec, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 5 Nov, 2018. The bullish trend returned +19.27% to investors. This was followed by a bearish trend that started on 22 Nov, 2018 and ended on 27 Nov, 2018. This bearish trend lost -1.38% of investor capital.

On monthly basis, UPL delivered profits in more months over the last year, than losses. UPL delivered profits in more months than NIFTY-50 index. UPL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Jun 2018, returned -12.69% compared to -6.42% returned by NIFTY-50 index in Sep 2018. UPL had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Oct 2018 to Jan 2019) during which period it delivered +14.77%. It is interesting to note that both UPL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it .
-- Peter Lynch

UPL 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 UPL's volatility from 31 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 UPL 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 UPL 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 UPL. Therefore, NIFTY-50 must receive a lower allocation than UPL in your portfolio. NIFTY-50 index usually has shorter drawdown period than UPL.

On a general note (since you are interested in UPL), two instruments that deserve special mention are BRITANNIA and ~CHEMICALS. They have significantly outperformed the overall market.