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

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.

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Monthly Performance

Alpha (outperformance)

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~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.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

~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.