9.14 -0.31 (-3.38%) Sell

Don't invest in GG now, it is a risky investment

13 min read

GOLDCORP INC (Foreign) significantly underperformed on Friday. It lost -3.38% to close at 9.14. On a day when the overall market breadth was 35%, it closed higher than 7% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing GG]

GG showed a strong down trend over the last 3 months. During this period GG lost -13.28% and saw a maximum drawdown of -22.18%. There was a short signal during this period which returned +13.28%.


GG has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, GG underperformed the SP500 index on 50% days. Which indicates that on days GG underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months GG delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +6.54%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -18.68%) was on Thursday, 25 Oct, 2018. There was initially a bearish trend during this period which started on 3 Oct, 2018 and went on till 5 Oct, 2018. The trend delivered -5.39% losses to investors. This was followed by a bullish trend that started on 14 Nov, 2018 and ended on 21 Nov, 2018. This bullish trend delivered +10.07% to investors.

GG had 4 profitable and 8 loss making months over the last year. During the last year, GG underperformed SP500 index on monthly return basis. GG was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -13.28% compared to -7.28% returned by SP500 index in Oct 2018. GG had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -42.93%.

Wealth after all is a relative thing since he that has little and wants less is richer than he that has much and wants more.
-- Charles Caleb Colton

GG is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in GG's volatility from 1 Oct, 2018 to 29 Oct, 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 GG has positive skewness in it's return distribution. This indicates that investors can expect GG to make attempts to recover from drawdowns quickly. Which makes GG a good candidate for momentum based trading on short-term bullish trends or counter-trends.

Investors trading in GG derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in GG), SQ is a mid cap that deserves to be closely tracked for investment opportunities.

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