Don't go shopping for MINING THEME now, it is underperforming the market
23 Jan, 201913 min read
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Mining ranked worse than it's peers today. It delivered -0.73% to close at 671.005. It's recent 5 day performance has been -0.48%, -0.6%, -0.91%, -0.36% and -0.74%.
~MINING showed a flat trend over the last 3 months. During this period ~MINING delivered +0.09% and saw a maximum drawdown of -14.42%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ~MINING till volatility reduces and a clear trend emerges.
~MINING has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 9 Jan, 2018 to 21 Jan, 2019. Over the last 3 years and 1 month, ~MINING underperformed the NIFTY-50 index on 52% days.
During the last three months ~MINING delivered losses on 58% days. However, it still managed to end this period in a profit. It's best return during this period (of +5.26%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -2.26%) was on Monday, 10 Dec, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 29 Oct, 2018 and went on till 9 Nov, 2018. This bullish trend returned +16.17% to investors.
The last 12 months saw ~MINING's investors making profits in 4 months and incurring losses in 8 months. During the last year, ~MINING and NIFTY-50 index had the same number of profitable months. ~MINING was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Jun 2018, returned -17.23% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~MINING had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -48.76%. It is interesting to note that both ~MINING and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
The hardest thing to understand in the world is the income tax.
-- Albert Einstein
~MINING 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 fall in ~MINING's volatility from 12 Dec, 2018 to 22 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 ~MINING has significant negative skewness in it's return distribution. This indicates that ~MINING is very risky for short-term investment and can significantly underperform for long durations.
~MINING has more chance of extreme outcomes than the NIFTY-50 index. Therefore, ~MINING must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than ~MINING.
Based on your interest in ~MINING you may find it interesting to know that NIITTECH and VINATIORGA are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.
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