NOK investors herd to book profits while the going is good
07 Dec, 201813 min read
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NOK delivered massive losses today. On a longer term basis, investors in NOKIA CORP (Foreign) made +0.05% per day. Friday's performance of -1.6% was a underperformance compared to it's daily average.
Buy-and-Hold investors in NOK experienced a maximum drawdown of -9.7% over the last three months. It increased by +2.6% during this bullish trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.
NOK has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 11 Jan, 2016 to 26 Jan, 2018. Over the last 2 years 11 months and 3 days, NOK underperformed the SP500 index on 52% days.
During the last three months NOK was mostly profitable and delivered on average +0.06% per day. It's best return during this period (of +4.89%) was on Friday, 26 Oct, 2018. While it's worst loss in the same period (of -5.23%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 11 Oct, 2018 and went on till 22 Oct, 2018. This bullish trend returned +8.68% to investors.
The last 12 months saw NOK's investors making profits in 7 months and incurring losses in 5 months. NOK was less consistent in delivering monthly returs than SP500 index. NOK significantly outperformed SP500 index in Feb 2018, when it returned +20.58% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NOK 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 NOK and SP500 index significantly outperform during months when quarterly/annual results are announced.
"Money is like manure. You have to spread it around or it smells.
NOK 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 NOK's volatility from 11 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that NOK 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.
Investors trading in NOK derivatives at this moment can consider 'Calendar Spread' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than NOK. Therefore, SP500 must receive a lower allocation than NOK in your portfolio. SP500 index usually has shorter drawdown period than NOK.
Based on your interest in NOK you may find it interesting to know that EHC, AAXN and HQY are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
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