AMBARELLA INC delivered massive losses on Monday. It returned -1.41% to close at 37.08. On a day when the overall market breadth was 34%, it closed higher than 14% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
AMBA showed a up trend over the last 3 months. During this period AMBA gained +1.64% and saw a maximum drawdown of -17.68%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in AMBA till volatility reduces and a clear trend emerges.
AMBA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, AMBA underperformed the SP500 index on 50% days. Which indicates that on days AMBA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
AMBA was profitable on 50% days in the last three months. During this time, it delivered on average +0.09% per day. It delivered it's best daily return of +18.49%, during this period, on Friday, 30 Nov, 2018. There was initially a bearish trend during this period which started on 2 Oct, 2018 and went on till 10 Oct, 2018. The trend delivered -19.11% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +8.89% to investors.
On monthly basis, AMBA delivered losses in more months over the last year, than profits. AMBA delivered profits less regularly than SP500 index. AMBA was also a more risky investment than SP500 index as it's worst month in the last year, Jun 2018, returned -20.98% compared to -7.28% returned by SP500 index in Oct 2018. AMBA and SP500 index, both had periods of 2 consecutive losing months.
Thirty to 40 years ago, most financial decisions were fairly simple.
-- Scott Cook
AMBA is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in AMBA's volatility from 3 Oct, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that AMBA has significant positive skewness in it's return distribution. This indicates that investors can expect AMBA to recover from drawdowns quickly. Which makes AMBA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in AMBA derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.
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