VEDL investors considering profit booking at current levels

VEDANTA LIMITED ranked better than it's peers today. It delivered +1.48% to close at 208.55. During the last week it delivered +4.64%.

[Themes containing VEDL]

VEDL is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for VEDL's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -2.14%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to VEDL.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

VEDL has been outperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 3 Feb, 2016 to 1 Nov, 2017. Over the last 2 years and 12 months, VEDL outperformed the NIFTY-50 index on 49% days. Which indicates that on days VEDL 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 VEDL was mostly profitable and delivered on average 0.0% per day. It's best return during this period (of +6.69%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -11.6%) was on Monday, 8 Oct, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +8.05%) started on 11 Dec, 2018 and went on till 18 Dec, 2018 while the bearish trend (which returned -9.02%) started on 20 Nov, 2018 and went on till 28 Nov, 2018.

The last 12 months saw VEDL's investors making profits in 6 months and incurring losses in 6 months. During the last year, VEDL and NIFTY-50 index had the same number of profitable months. VEDL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -17.8% compared to -6.42% returned by NIFTY-50 index in Sep 2018. VEDL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -30.95%.

Invest like a bull, sit like a bear and watch like an eagle. (mantra for long term investing)
-- Vijay Kedia

VEDL 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 VEDL's volatility from 19 Sep, 2018 to 8 Oct, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that VEDL has significant negative skewness in it's return distribution. This indicates that VEDL is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in VEDL derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in VEDL you may find it interesting to know that IGARASHI, NIFTY50-DIV-POINT and ~HOMEAPPLIANCES are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.