Don't give up on CHT now, it gave a fairly good return
11 Dec, 201813 min read
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CHUNGHWA TELECOM CO LTD (Foreign) ranked better than it's peers today. It delivered +0.43% to close at 35.01. It's recent 5 day performance has been +0.23%, +0.06%, +1.64%, -1.41% and -0.12%.
CHT showed a bearish trend over the last 3 months. During this period CHT fell by -1.02% and saw a maximum drawdown of -5.75%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in CHT till volatility reduces and a clear trend emerges.
CHT has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 12 Jul, 2016 to 30 Aug, 2018. Over the last 2 years 11 months and 7 days, CHT underperformed the SP500 index on 48% days. Which indicates that on days CHT underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months CHT was mostly loss making and delivered on average -0.01% per day. It's best return during this period (of +1.78%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -1.41%) was on Tuesday, 4 Dec, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +2.84%) started on 25 Oct, 2018 and went on till 30 Oct, 2018 while the bearish trend (which returned -2.85%) started on 10 Oct, 2018 and went on till 15 Oct, 2018.
During the last year CHT had 5 profitable months and 7 loss making months. CHT returned profits in fewer months than SP500 index. CHT significantly outperformed SP500 index in Mar 2018, when it returned +5.0% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CHT had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Apr 2018 to Jul 2018) during which period it delivered -10.87%.
A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-- David Brinkley
CHT 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 CHT's volatility from 25 Sep, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that CHT has significant positive skewness in it's return distribution. This indicates that investors can expect CHT to recover from drawdowns quickly. Which makes CHT a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
SP500 index has more chance of extreme outcomes than CHT. Therefore, SP500 must receive a lower allocation than CHT in your portfolio. CHT usually has shorter drawdown period than the SP500 index.
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