Diversified Businesses THEME

1431.21 +7.94 (+0.55%) Sell

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Want to invest in DIVERSIFIED THEME? Consider as it managed to marginally outperform the broader market

14 min read

Diversified Businesses managed to marginally outperform the broader market on Friday. It gained +0.55% to close at 1431.21. It is currently trading -26% below it's 52 week high of 1946.48.

[Theme constituents]

~DIVERSIFIED showed a strong down trend over the last 3 months. During this period ~DIVERSIFIED returned -14.22% and saw a maximum drawdown of -18.23%. There were 2 short signals during this period that returned a cumulative of +12.92% to investors.

Trend

~DIVERSIFIED has been underperforming the NIFTY-50 index in recent time, after having outperformed till 21 Apr, 2017. Over the last 2 years 11 months and 9 days, ~DIVERSIFIED underperformed the NIFTY-50 index on 47% days. Which indicates that on days ~DIVERSIFIED underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

~DIVERSIFIED returned losses on 57% days in the last three months. During this time, it delivered on average -0.25% per day. It delivered it's worst daily return of -4.48%, during this period, on Monday, 1 Oct, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +6.29% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -6.89% of investor capital.

On monthly basis, ~DIVERSIFIED delivered losses in more months over the last year, than profits. ~DIVERSIFIED delivered profits less regularly than NIFTY-50 index. ~DIVERSIFIED was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -11.43% compared to -5.65% returned by NIFTY-50 index in Oct 2018. ~DIVERSIFIED had a shorter streak of profitable months than NIFTY-50 index. It only went up in 3 straight months during the last year. It is interesting to note that both ~DIVERSIFIED and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

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~DIVERSIFIED is becoming more volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant surge in ~DIVERSIFIED's volatility from 17 Sep, 2018 to 17 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 ~DIVERSIFIED 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.

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

On a general note (since you are interested in ~DIVERSIFIED), three instruments that deserve special mention are HEG, CUB and RESPONIND. They have all outperformed the market and must be closely watched for investment opportunities.

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