39.29 +0.24 (+0.61%) Sell

Waiting to invest in BP? Consider it, because it showed marginal outperformance

13 min read

BP outperformed the broader market today. On a longer term basis, investors in BP PLC (Foreign) made +0.01% per day. Thursday's performance of +0.61% was a outperformance compared to it's daily average.

[Themes containing BP]

BP showed a bearish trend over the last 3 months. During this period BP delivered -9.18% and saw a maximum drawdown of -16.9%. There was a short signal during this period which returned +12.1%.


BP has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 16 Aug, 2017 to 21 May, 2018. Over the last 2 years 11 months and 9 days, BP underperformed the SP500 index on 48% days. Which indicates that on days BP underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months BP was mostly loss making and delivered on average -0.14% per day. It's best return during this period (of +2.92%) was on Wednesday, 21 Nov, 2018. While it's worst loss in the same period (of -4.27%) was on Thursday, 8 Nov, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +6.92%) started on 18 Sep, 2018 and went on till 25 Sep, 2018 while the bearish trend (which returned -5.27%) started on 4 Dec, 2018 and went on till 12 Dec, 2018.

The last 12 months saw BP's investors making profits in 5 months and incurring losses in 7 months. BP was less consistent in delivering monthly returs than SP500 index. BP significantly outperformed SP500 index in Apr 2018, when it returned +11.73% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. BP had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both BP and SP500 index significantly outperform during months when quarterly/annual results are announced.

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BP is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in BP's volatility from 14 Sep, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that BP has significant positive skewness in it's return distribution. This indicates that investors can expect BP to recover from drawdowns quickly. Which makes BP a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in BP derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in BP), two mid cap instruments that deserve special mention are LULU and TWTR. They have significantly outperformed the overall market.

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