G continues its fall as more investors loose confidence
17 Dec, 201813 min read
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GENPACT LTD performed worse than the broader market on Monday. It fell by -0.62% to close at 27.23. It is currently trading -21% below it's 52 week high of 34.76.
Buy-and-Hold investors in G experienced a maximum drawdown of -13.46% over the last three months. It fell by -10.13% during this strong bearish 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 +4.69%.
G has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 18 Feb, 2016 to 6 Nov, 2018. Over the last 2 years 11 months and 10 days, G underperformed the SP500 index on 46% days. Which indicates that on days G underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
G returned losses on 69% days in the last three months. During this time, it delivered on average -0.16% per day. It delivered it's best daily return of +7.34%, during this period, on Wednesday, 7 Nov, 2018. The longest stort-term trend during this period was 8 losing days, which started on 18 Oct, 2018 and ended on 29 Oct, 2018. This bearish trend lost -8.39% of investor capital.
During the last year G had 6 profitable months and 6 loss making months. G returned profits in fewer months than SP500 index. G significantly outperformed SP500 index in Nov 2018, when it returned +10.84% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. G had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both G and SP500 index significantly outperform during months when quarterly/annual results are announced.
Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it insures the possibility of satisfying a new desire when it arises.
-- Aristotle
G is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in G's volatility from 28 Sep, 2018 to 9 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 G has significant positive skewness in it's return distribution. This indicates that investors can expect G to recover from drawdowns quickly. Which makes G 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 G. Therefore, SP500 must receive a lower allocation than G in your portfolio. G usually has shorter drawdown period than the SP500 index.
On a general note (since you are interested in G), two mid cap instruments that deserve special mention are RHT and ABMD. They have significantly outperformed the overall market.
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