35.91 -1.25 (-3.47%) Sell

Don't invest in RDY now, it is a volatile investment

13 min read

DR REDDYS LABORATORIES LTD (Foreign) has destroyed investor wealth today. It returned -3.47% to close at 35.91. It's recent 5 day performance has been +1.17%, -2.57%, -0.87%, -0.96% and +0.52%.

[Themes containing RDY]

RDY showed a flat trend over the last 3 months. During this period RDY returned +0.93% and saw a maximum drawdown of -13.18%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in RDY till volatility reduces and a clear trend emerges.


RDY has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 8 days, RDY underperformed the SP500 index on 50% days. Which indicates that on days RDY underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months RDY was mostly profitable and delivered on average +0.03% per day. It's best return during this period (of +5.16%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.63%) was on Tuesday, 30 Oct, 2018. There was initially a bearish trend during this period which started on 3 Oct, 2018 and went on till 8 Oct, 2018. The trend delivered -5.77% losses to investors. This was followed by a bullish trend that started on 12 Nov, 2018 and ended on 23 Nov, 2018. This bullish trend delivered +10.68% to investors.

On monthly basis, RDY delivered losses in more months over the last year, than profits. RDY delivered profits less regularly than SP500 index. RDY significantly outperformed SP500 index in Jun 2018, when it returned +13.02% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. RDY had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jan 2018 to May 2018) during which period it delivered -26.79%.

"The real measure of your wealth is how much you'd be worth if you lost all your money

RDY is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in RDY's volatility from 13 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that RDY has significant positive skewness in it's return distribution. This indicates that investors can expect RDY to recover from drawdowns quickly. Which makes RDY 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 RDY. Therefore, SP500 must receive a lower allocation than RDY in your portfolio. RDY usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in RDY), V is a large cap that deserves to be closely tracked for investment opportunities.

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