23.43 +0.07 (+0.3%) Sell

GHM shows sign of weakness as investors do cost averaging

13 min read

GRAHAM CORP is looking better than most other alternatives on Tuesday. It grew by +0.3% to close at 23.43. On a day when the overall market breadth was 35%, it closed higher than 18% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing GHM]

Buy-and-Hold investors in GHM experienced a maximum drawdown of -17.7% over the last three months. It lost -14.64% during this strong down 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 +10.4%.


GHM has been underperforming the SP500 index in recent time, after having outperformed till 4 Jan, 2017. Over the last 2 years 11 months and 7 days, GHM outperformed the SP500 index on 52% days.

During the last three months GHM was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +4.59%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -4.84%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 16 Oct, 2018 and went on till 25 Oct, 2018. The trend delivered -12.91% losses to investors. This was followed by a bullish trend that started on 6 Nov, 2018 and ended on 9 Nov, 2018. This bullish trend delivered +5.99% to investors.

GHM had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of GHM and SP500 index were the same. GHM significantly outperformed SP500 index in May 2018, when it returned +18.21% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GHM had a longer winning streak of profitable months than SP500 index. It went up in 7 straight months (from Mar 2018 to Sep 2018) during which period it delivered +34.0%.

As long as you're going to be thinking anyway, think big.
-- Donald Trump

GHM 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 GHM's volatility from 1 Oct, 2018 to 7 Dec, 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 GHM has significant negative skewness in it's return distribution. This indicates that GHM is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in GHM you may find it interesting to know that VIPS and IMTE are highly volatile and therefore risky. Investors should consider limiting their exposure to these instruments (because of their volatile nature).

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