Hotels THEME

1543.72 -2.17 (-0.14%) Sell

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Don't consider buying HOTELS THEME now, it is risky at the moment

15 min read

Hotels performed worse than the broader market today. It lost -0.14% to close at 1543.72. It's recent 5 day performance has been -0.31%, +0.29%, +0.35%, -0.92% and -0.61%.

[Theme constituents]

~HOTELS showed a up trend over the last 3 months. During this period ~HOTELS grew by +7.14% and saw a maximum drawdown of -7.63%. There were 2 long signals during this period that returned a cumulative of +1.35% to investors.


~HOTELS has been underperforming the NIFTY-50 index in recent time, after having outperformed till 24 Apr, 2018. Over the last 3 years and 1 month, ~HOTELS underperformed the NIFTY-50 index on 51% days.

During the last three months ~HOTELS delivered losses on 57% days. However, it still managed to end this period in a profit. It's best return during this period (of +3.97%) was on Thursday, 29 Nov, 2018. While it's worst loss in the same period (of -2.76%) was on Monday, 10 Dec, 2018. There was initially a bearish trend during this period which started on 30 Nov, 2018 and went on till 10 Dec, 2018. The trend delivered -7.87% losses to investors. This was followed by a bullish trend that started on 11 Dec, 2018 and ended on 18 Dec, 2018. This bullish trend delivered +11.29% to investors.

~HOTELS had 2 profitable and 10 loss making months over the last year. During the last year, ~HOTELS underperformed NIFTY-50 index on monthly return basis. ~HOTELS was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -15.91% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~HOTELS had a longer winning streak of losing months than NIFTY-50 index. It went down in 7 straight months (from Apr 2018 to Oct 2018) during which period it delivered -44.87%.

"I finally know what distinguishes man from the other beasts: financial worries.

~HOTELS 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 ~HOTELS's volatility from 18 Dec, 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 ~HOTELS 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 ~HOTELS. Therefore, NIFTY-50 must receive a lower allocation than ~HOTELS in your portfolio. NIFTY-50 index usually has shorter drawdown period than ~HOTELS.

On a general note (since you are interested in ~HOTELS), two instruments that have delivered similar performance as ~HOTELS are OFSS and GSPL. They are suitable as good alternative investment candidates that can diversify your portfolio.

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