TURQUOISE HILL RESOURCES LTD. (FOREIGN)

1.68 +0.02 (+1.2%) Sell

TRQ does a dead cat bounce, it's still too early to buy into it

13 min read

TURQUOISE HILL RESOURCES LTD. (Foreign) delivered good returns on Friday. It grew by +1.2% to close at 1.68. On a day when the overall market breadth was 35%, it closed higher than 6% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing TRQ]

TRQ showed a strong down trend over the last 3 months. During this period TRQ lost -21.5% and saw a maximum drawdown of -27.15%. There was a short signal during this period which returned +21.5%.

Trend

TRQ has been underperforming the SP500 index in recent time, after having outperformed till 14 Jul, 2016. Over the last 2 years 11 months and 10 days, TRQ underperformed the SP500 index on 52% days.

During the last three months TRQ was mostly loss making and delivered on average -0.33% per day. It's best return during this period (of +15.2%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.63%) was on Tuesday, 23 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +3.24% to investors. This was followed by a bearish trend that started on 15 Oct, 2018 and ended on 19 Oct, 2018. This bearish trend lost -7.88% of investor capital.

TRQ had 4 profitable and 8 loss making months over the last year. During the last year, TRQ underperformed SP500 index on monthly return basis. TRQ was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -19.34% compared to -7.28% returned by SP500 index in Oct 2018. TRQ had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -44.23%.

The stock market is a discounter of all known information.
-- Kenneth Fisher

TRQ 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 TRQ's volatility from 17 Sep, 2018 to 1 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 TRQ has significant negative skewness in it's return distribution. This indicates that TRQ is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in TRQ), two instruments that deserve special mention are SBOT and AMRH. They have significantly outperformed the overall market.

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