Looking to invest in DIOD? Consider it, because it showed marginal outperformance
11 Dec, 201813 min read
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DIODES INC showed marginal outperformance on Tuesday. It increased by +0.25% to close at 31.66. It is currently trading -18% below it's 52 week high of 38.9.
DIOD showed a bearish trend over the last 3 months. During this period DIOD fell by -4.7% and saw a maximum drawdown of -18.6%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in DIOD till volatility reduces and a clear trend emerges.
DIOD has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 3 Aug, 2016 to 24 Jul, 2018. Over the last 2 years 11 months and 7 days, DIOD outperformed the SP500 index on 51% days.
During the last three months DIOD delivered profits on 53% days. However, it still managed to end this period in a loss. It's best return during this period (of +14.07%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -7.35%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 4 profitable days, which started on 11 Oct, 2018 and went on till 16 Oct, 2018. This bullish trend returned +5.41% to investors.
During the last year DIOD had 7 profitable months and 5 loss making months. DIOD returned profits in fewer months than SP500 index. DIOD significantly outperformed SP500 index in May 2018, when it returned +19.93% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. DIOD had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.
The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger
DIOD 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 DIOD's volatility from 18 Sep, 2018 to 7 Nov, 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 DIOD 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.
SP500 index has more chance of extreme outcomes than DIOD. Therefore, SP500 must receive a lower allocation than DIOD in your portfolio. SP500 index usually has shorter drawdown period than DIOD.
On a general note (since you are interested in DIOD), if you are evaluating DIOD as an investment candidate, then you should read about USO which has delivered similar performance and can help diversify your portfolio.
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