BITAUTO HOLDINGS LTD (FOREIGN)

19.55 -0.95 (-4.87%) Buy

BITA investors herd to book profits while the going is good

13 min read

BITAUTO HOLDINGS LTD (Foreign) significantly underperformed on Friday. It lost -4.87% to close at 19.55. On a day when the overall market breadth was 35%, it closed higher than 86% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing BITA]

Buy-and-Hold investors in BITA experienced a maximum drawdown of -32.78% over the last three months. It lost -12.33% during this strong 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 +2.11%.

Trend

BITA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, BITA underperformed the SP500 index on 48% days. Which indicates that on days BITA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months BITA was mostly loss making and delivered on average -0.11% per day. It's best return during this period (of +10.81%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -12.31%) was on Thursday, 29 Nov, 2018. There was initially a bullish trend during this period which started on 25 Sep, 2018 and went on till 1 Oct, 2018. The bullish trend returned +3.26% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -19.53% of investor capital.

BITA had 5 profitable and 7 loss making months over the last year. During the last year, BITA underperformed SP500 index on monthly return basis. BITA was also a more risky investment than SP500 index as it's worst month in the last year, Mar 2018, returned -25.5% compared to -7.28% returned by SP500 index in Oct 2018. BITA had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Aug 2018 to Nov 2018) during which period it delivered -25.91%. It is interesting to note that both BITA and SP500 index significantly outperform during months when quarterly/annual results are announced.

Here's my gift-giving rule: Respect your current financial situation.
-- Suze Orman

BITA is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in BITA's volatility from 17 Sep, 2018 to 12 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 BITA has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

On a general note (since you are interested in BITA), if you are an investor in NVCN, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.

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