19.41 -0.81 (-4.2%) Sell

TEVA investors take a massive hit

13 min read

TEVA PHARMACEUTICAL INDUSTRIES LTD was among the worst performers on Friday. It lost -4.2% to close at 19.41. It is currently trading -24% below it's 52 week high of 25.65.

[Themes containing TEVA]

Buy-and-Hold investors in TEVA experienced a maximum drawdown of -21.83% over the last three months. It lost -7.83% during this down trending period. There were no long signals during this period, where the short signal generated good profits of +7.83% for investors.


TEVA has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, TEVA underperformed the SP500 index on 52% days.

During the last three months TEVA was mostly loss making and delivered on average -0.09% per day. It's best return during this period (of +15.12%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.73%) was on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 10 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +16.73% to investors. This was followed by a bearish trend that started on 13 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -8.36% of investor capital.

TEVA had 5 profitable and 7 loss making months over the last year. During the last year, TEVA underperformed SP500 index on monthly return basis. TEVA significantly outperformed SP500 index in May 2018, when it returned +19.58% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. TEVA had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jul 2018 to Oct 2018) during which period it delivered -19.35%. It is interesting to note that both TEVA and SP500 index significantly outperform during months when quarterly/annual results are announced.

"I believe that through knowledge and discipline, financial peace is possible for all of us.

TEVA 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 fall in TEVA's volatility from 1 Nov, 2018 to 30 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that TEVA has positive skewness in it's return distribution. This indicates that investors can expect TEVA to make attempts to recover from drawdowns quickly. Which makes TEVA a good candidate for momentum based trading on short-term bullish trends or counter-trends.

Investors trading in TEVA derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in TEVA), three instruments that deserve special mention are ECYT, NIHD and TNDM. They have all outperformed the market and must be closely watched for investment opportunities.

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