30.72 +0.01 (+0.03%) Sell

Are you evaluating investing in CEA? Consider as it performed better than the broader market

13 min read

CEA was among the best performers today. On a longer term basis, investors in CHINA EASTERN AIRLINES CORP LTD (Foreign) made +0.06% per day. Friday's performance of +0.03% was a significant outperformance compared to it's daily average.

[Themes containing CEA]

CEA showed a up trend over the last 3 months. During this period CEA returned +2.16% and saw a maximum drawdown of -22.6%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in CEA till volatility reduces and a clear trend emerges.


CEA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, CEA underperformed the SP500 index on 52% days.

During the last three months CEA delivered losses on 53% days. However, it still managed to end this period in a profit. It's best return during this period (of +7.43%) was on Monday, 22 Oct, 2018. While it's worst loss in the same period (of -4.96%) was on Thursday, 8 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -13.15% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 7 Nov, 2018. This bullish trend delivered +22.72% to investors.

CEA had 4 profitable and 8 loss making months over the last year. During the last year, CEA underperformed SP500 index on monthly return basis. CEA significantly outperformed SP500 index in Jan 2018, when it returned +24.02% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CEA had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -22.74%. It is interesting to note that both CEA and SP500 index significantly outperform during months when quarterly/annual results are announced.

It takes as much energy to wish as it does to plan.
-- Eleanor Roosevelt

CEA 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 CEA's volatility from 17 Sep, 2018 to 2 Nov, 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 CEA has significant negative skewness in it's return distribution. This indicates that CEA is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in CEA), two large cap instruments that deserve special mention are MSFT and CSCO. They have significantly outperformed the overall market.

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