PLASTIC THEME shows sign of weakness as investors do cost averaging

Plastic performed better than the broader market today. It lost -0.25% to close at 1489.5. During the last week it returned +1.09% and saw a maximum drawdown of -0.25% before bouncing back.

[Theme constituents]

Buy-and-Hold investors in ~PLASTIC experienced a maximum drawdown of -15.25% over the last three months. It lost -5.17% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +3.48%.

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Monthly Performance

Alpha (outperformance)

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~PLASTIC has been underperforming the NIFTY-50 index in recent time, after having outperformed till 12 Jan, 2018. Over the last 2 years and 12 months, ~PLASTIC outperformed the NIFTY-50 index on 51% days.

During the last three months ~PLASTIC was mostly loss making and delivered on average -0.08% per day. It's best return during this period (of +3.84%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -3.47%) was on Friday, 28 Sep, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +7.45% to investors. This was followed by a bearish trend that started on 28 Nov, 2018 and ended on 6 Dec, 2018. This bearish trend lost -4.35% of investor capital.

~PLASTIC had 5 profitable and 7 loss making months over the last year. During the last year, ~PLASTIC underperformed NIFTY-50 index on monthly return basis. ~PLASTIC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -12.19% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~PLASTIC and NIFTY-50 index, both had periods of 2 consecutive losing months. It is interesting to note that both ~PLASTIC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Don't always trust what you see. In a bull market even a duck looks like a swan.
-- Vijay Kedia

~PLASTIC 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 ~PLASTIC's volatility from 19 Sep, 2018 to 24 Sep, 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 ~PLASTIC has significant positive skewness in it's return distribution. This indicates that investors can expect ~PLASTIC to recover from drawdowns quickly. Which makes ~PLASTIC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ~PLASTIC), three instruments that have performed similar to ~PLASTIC are GSKCONS, ~HINDUJAGRP and AKZOINDIA. They must all be evaluated as alternative investment options and for diversification.