7.73 -0.23 (-3.01%) Buy

Stop-loss on the minds of SBS investors as it underperforms

13 min read

COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO-SABESP (Foreign) has destroyed investor wealth today. It fell by -3.01% to close at 7.73. During the last week it delivered +7.51% and saw a maximum drawdown of -3.13% before bouncing back.

[Themes containing SBS]

SBS is currently in a bullish trend. Over the last three months 2 bullish signals in SBS have generated a profit of +16.67% for investors.


SBS has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 15 Feb, 2017 to 14 Sep, 2018. Over the last 2 years 11 months and 10 days, SBS outperformed the SP500 index on 52% days.

During the last three months SBS was mostly profitable and delivered on average +0.47% per day. It's best return during this period (of +9.54%) was on Monday, 8 Oct, 2018. While it's worst loss in the same period (of -5.06%) was on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 2 Oct, 2018 and went on till 9 Oct, 2018. This bullish trend returned +28.41% to investors.

During the last year SBS had 5 profitable months and 7 loss making months. SBS returned profits in fewer months than SP500 index. SBS was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -31.16% compared to -7.28% returned by SP500 index in Oct 2018. SBS had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Mar 2018 to Jun 2018) during which period it delivered -54.95%. It is interesting to note that both SBS and SP500 index significantly outperform during months when quarterly/annual results are announced.

The difference between playing the stock market and the horses is that one of the horses must win.
-- Joey Adams

SBS 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 fall in SBS's volatility from 8 Oct, 2018 to 23 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 SBS 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.

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

Based on your interest in SBS you may find it interesting to know that PRQR has shown remarkable performance this year and deserves to be on every investors' watchlist.

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