42.68 -0.65 (-1.52%) Buy

Search for alternative investments is on for SQM investors as it underperforms broader market

13 min read

CHEMICAL & MINING CO OF CHILE INC (Foreign) was among the worst performers today. It lost -1.52% to close at 42.68. During the last week it lost -2.0% and saw a maximum drawdown of -2.0%.

[Themes containing SQM]

SQM is currently in a up trend. The previous long signal in SQM has not been profitable for investors in general. If you are invested in SQM at current levels please make sure that your allocation is limited and that your portfolio is well diversified.


SQM has been underperforming the SP500 index in recent time, after having outperformed till 19 Sep, 2017. Over the last 2 years 11 months and 10 days, SQM outperformed the SP500 index on 52% days.

SQM returned losses on 62% days in the last three months. During this time, it delivered on average -0.13% per day. It delivered it's best daily return of +7.6%, during this period, on Thursday, 1 Nov, 2018. There was initially a bullish trend during this period which started on 30 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +14.62% to investors. This was followed by a bearish trend that started on 5 Nov, 2018 and ended on 13 Nov, 2018. This bearish trend lost -9.05% of investor capital.

SQM had 4 profitable and 8 loss making months over the last year. During the last year, SQM underperformed SP500 index on monthly return basis. SQM significantly outperformed SP500 index in Apr 2018, when it returned +14.35% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SQM had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -21.32%. It is interesting to note that both SQM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"I do not regard a broker as a member of the human race.

SQM 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 SQM's volatility from 1 Oct, 2018 to 2 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 SQM has positive skewness in it's return distribution. This indicates that investors can expect SQM to make attempts to recover from drawdowns quickly. Which makes SQM a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

On a general note (since you are interested in SQM), two mid cap instruments that deserve special mention are LULU and AMD. They have significantly outperformed the overall market.

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