ARENA PHARMACEUTICALS INC

41.09 -1.42 (-3.45%) Sell

ARNA is a falling knife, continues to bleed every investor trying to catch it

13 min read

ARNA is a falling knife that can bleed you if you catch it today. On a longer term basis, investors in ARENA PHARMACEUTICALS INC made +0.14% per day. Friday's performance of -3.45% was a significant underperformance compared to it's daily average.

[Themes containing ARNA]

Buy-and-Hold investors in ARNA experienced a maximum drawdown of -31.67% over the last three months. It lost -1.18% during this down trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.

Trend

ARNA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, ARNA outperformed the SP500 index on 49% days. Which indicates that on days ARNA outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

ARNA was profitable on 50% days in the last three months. During this time, it delivered on average +0.08% per day. It delivered it's best daily return of +21.62%, during this period, on Thursday, 15 Nov, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +5.14% to investors. This was followed by a bearish trend that started on 8 Nov, 2018 and ended on 14 Nov, 2018. This bearish trend lost -16.96% of investor capital.

ARNA had 9 profitable and 3 loss making months over the last year. ARNA was profitable in more months than SP500 index. ARNA was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -22.71% compared to -7.28% returned by SP500 index in Oct 2018. ARNA had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.

A simple fact that is ard to learn is that the time to save money is when you have some.
-- Joe Moore

ARNA 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 ARNA's volatility from 27 Sep, 2018 to 29 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 ARNA has significant negative skewness in it's return distribution. This indicates that ARNA is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in ARNA derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than ARNA. Therefore, SP500 must receive a lower allocation than ARNA in your portfolio. SP500 index usually has shorter drawdown period than ARNA.

On a general note (since you are interested in ARNA), three small cap instruments that deserve special mention are AAXN, PTC and KEYS. They have all outperformed the market and must be closely watched for investment opportunities.

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