8.65 -0.08 (-0.92%) Sell

Looking to invest in P? Avoid at the moment as it significantly underperformed

13 min read

P significantly underperformed today. On a longer term basis, investors in PANDORA MEDIA, INC. made +0.06% per day. Friday's performance of -0.92% was a underperformance compared to it's daily average.

[Themes containing P]

P showed a bearish trend over the last 3 months. During this period P fell by -8.95% and saw a maximum drawdown of -17.57%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in P till volatility reduces and a clear trend emerges.


P has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Oct, 2016 to 26 Jan, 2018. Over the last 2 years 11 months and 10 days, P underperformed the SP500 index on 49% days. Which indicates that on days P underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

P returned losses on 51% days in the last three months. During this time, it delivered on average -0.13% per day. It delivered it's worst daily return of -4.84%, during this period, on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 11 Oct, 2018 and went on till 17 Oct, 2018. This bullish trend returned +4.58% to investors.

During the last year P had 7 profitable months and 5 loss making months. P returned profits in fewer months than SP500 index. P significantly outperformed SP500 index in Aug 2018, when it returned +37.09% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. P had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

It's not the situation, but whether we react (negative) or respond (positive) to the situation that's important.
-- Zig Ziglar

P 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 fall in P's volatility from 24 Sep, 2018 to 16 Nov, 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 P has significant positive skewness in it's return distribution. This indicates that investors can expect P to recover from drawdowns quickly. Which makes P a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in P derivatives at this moment can consider 'Married Put' options strategy to receive better risk-adjusted returns.

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

Based on your interest in P you may find it interesting to know that VIPS is highly volatile and investors investing in it must take extreme caution. Consider either reducing your exposure to VIPS or sufficiently diversifying your portfolio.

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