20.53 -0.42 (-2.05%) Sell

Doubt in the minds of OLN investors as it significantly underperforms

13 min read

OLIN CORP significantly underperformed on Thursday. It fell by -2.05% to close at 20.53. It is currently trading -46% below it's 52 week high of 38.6.

[Themes containing OLN]

Buy-and-Hold investors in OLN experienced a maximum drawdown of -31.95% over the last three months. It fell by -29.01% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +27.52% for investors.


OLN has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Jan, 2018 to 30 Oct, 2018. Over the last 2 years 11 months and 9 days, OLN underperformed the SP500 index on 51% days.

During the last three months OLN was mostly loss making and delivered on average -0.51% per day. It's best return during this period (of +7.13%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.17%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 9 losing days, which started on 21 Sep, 2018 and ended on 3 Oct, 2018. This bearish trend lost -11.02% of investor capital.

During the last year OLN had 6 profitable months and 6 loss making months. OLN returned profits in fewer months than SP500 index. OLN was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -20.44% compared to -7.28% returned by SP500 index in Oct 2018. OLN 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 OLN and SP500 index significantly outperform during months when quarterly/annual results are announced.

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
-- Warren Buffett

OLN 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 OLN's volatility from 14 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that OLN has significant positive skewness in it's return distribution. This indicates that investors can expect OLN to recover from drawdowns quickly. Which makes OLN a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in OLN), two instruments that deserve special mention are AMRH and ~SMALLCAP. They have significantly outperformed the overall market.

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