GLAXOSMITHKLINE PLC (FOREIGN)

37.94 +0.26 (+0.69%) Sell

GSK investors looking to add more to current positions

13 min read

GLAXOSMITHKLINE PLC (Foreign) outperformed the broader market today. It increased by +0.69% to close at 37.94. During the last week it increased by +1.72% and saw a maximum drawdown of -0.85% before bouncing back.

[Themes containing GSK]

Buy-and-Hold investors in GSK experienced a maximum drawdown of -10.91% over the last three months. It fell by -3.24% during this 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.

Trend

GSK has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Feb, 2016 to 14 Sep, 2018. Over the last 2 years 11 months and 9 days, GSK underperformed the SP500 index on 51% days.

During the last three months GSK was mostly loss making and delivered on average -0.04% per day. It's best return during this period (of +3.18%) was on Friday, 19 Oct, 2018. While it's worst loss in the same period (of -7.79%) was on Monday, 3 Dec, 2018. The longest stort-term trend during this period was 4 losing days, which started on 3 Dec, 2018 and ended on 7 Dec, 2018. This bearish trend lost -11.21% of investor capital.

During the last year GSK had 6 profitable months and 6 loss making months. GSK returned profits in fewer months than SP500 index. GSK was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -9.39% compared to -7.28% returned by SP500 index in Oct 2018. GSK had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both GSK and SP500 index significantly outperform during months when quarterly/annual results are announced.

Fortune sides with him who dares.
-- Virgil

GSK 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 GSK's volatility from 8 Oct, 2018 to 31 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 GSK has significant positive skewness in it's return distribution. This indicates that investors can expect GSK to recover from drawdowns quickly. Which makes GSK a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in GSK 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 GSK. Therefore, SP500 must receive a lower allocation than GSK in your portfolio. SP500 index usually has shorter drawdown period than GSK.

On a general note (since you are interested in GSK), TNDM has performed really well this year and deserves to be closely tracked for investment opportunities.

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