36.17 -0.39 (-1.07%) Sell

Don't even consider investing in PHG now, it is a risky investment

13 min read

KONINKLIJKE PHILIPS NV (Foreign) significantly underperformed on Tuesday. It fell by -1.07% to close at 36.17. On a day when the overall market breadth was 35%, it closed higher than 70% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing PHG]

PHG showed a strong bearish trend over the last 3 months. During this period PHG fell by -20.31% and saw a maximum drawdown of -24.3%. There was a short signal during this period which returned +11.17%.


PHG has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 6 Jul, 2016 to 21 Sep, 2017. Over the last 2 years 11 months and 7 days, PHG outperformed the SP500 index on 54% days.

During the last three months PHG was mostly loss making and delivered on average -0.34% per day. It's best return during this period (of +3.5%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -8.59%) was on Monday, 22 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -16.11% of investor capital.

During the last year PHG had 8 profitable months and 4 loss making months. Profitable number of months of PHG and SP500 index were the same. PHG was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -18.48% compared to -7.28% returned by SP500 index in Oct 2018. PHG had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both PHG and SP500 index significantly outperform during months when quarterly/annual results are announced.

Money won't create success, the freedom to make it will.
-- Nelson Mandela

PHG 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 PHG's volatility from 24 Sep, 2018 to 30 Oct, 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 PHG has significant positive skewness in it's return distribution. This indicates that investors can expect PHG to recover from drawdowns quickly. Which makes PHG a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in PHG), two instruments that have been extremely volatile in recent times are IX and NVCN. Investors in these instruments should consider reducing their exposure (to IX and NVCN) and diversifying their portfolios.

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