Don't buy AMGN now, it is underperforming the market
14 Dec, 201813 min read
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AMGEN INC delivered massive losses today. It fell by -2.76% to close at 192.07. It's recent 5 day performance has been +0.57%, +0.12%, +1.08%, +1.38% and -3.8%.
AMGN showed a bearish trend over the last 3 months. During this period AMGN fell by -4.35% and saw a maximum drawdown of -10.97%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in AMGN till volatility reduces and a clear trend emerges.
AMGN has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 20 Jan, 2016 to 10 May, 2018. Over the last 2 years 11 months and 10 days, AMGN underperformed the SP500 index on 47% days. Which indicates that on days AMGN underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
AMGN was profitable on 55% days in the last three months. During this time, it delivered on average -0.06% per day. It delivered it's worst daily return of -4.94%, during this period, on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 17 Sep, 2018 and went on till 24 Sep, 2018. This bullish trend returned +3.16% to investors.
During the last year AMGN had 8 profitable months and 4 loss making months. Profitable number of months of AMGN and SP500 index were the same. AMGN significantly outperformed SP500 index in Nov 2018, when it returned +8.02% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. AMGN and SP500 index, both had periods of 6 consecutive profitable months. It is interesting to note that both AMGN and SP500 index significantly outperform during months when quarterly/annual results are announced.
Be quick in cutting your loses but not profits
-- Abhishek Shukla
AMGN is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AMGN's volatility from 17 Sep, 2018 to 25 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that AMGN has significant positive skewness in it's return distribution. This indicates that investors can expect AMGN to recover from drawdowns quickly. Which makes AMGN a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in AMGN derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
AMGN has more chance of extreme outcomes than the SP500 index. Therefore, AMGN must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than AMGN.
Based on your interest in AMGN you may find it interesting to know that TJX has delivered similar performance as AMGN and can be considered as an alternative investment candidate (to AMGN).
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