YY INC. (FOREIGN)

62.66 -1.99 (-3.18%) Sell

The party never started for YY investors as it destroyed investor wealth

13 min read

YY INC. (Foreign) was among the worst performers on Friday. It returned -3.18% to close at 62.66. On a day when the overall market breadth was 35%, it closed higher than 87% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing YY]

Buy-and-Hold investors in YY experienced a maximum drawdown of -24.94% over the last three months. It returned -11.23% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +11.23% for investors.

Trend

YY has been underperforming the SP500 index in recent time, after having outperformed till 25 Jan, 2018. Over the last 2 years 11 months and 3 days, YY underperformed the SP500 index on 49% days. Which indicates that on days YY underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

YY returned losses on 56% days in the last three months. During this time, it delivered on average -0.12% per day. It delivered it's worst daily return of -12.11%, during this period, on Wednesday, 17 Oct, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +6.62% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -10.06% of investor capital.

On monthly basis, YY delivered losses in more months over the last year, than profits. YY delivered profits less regularly than SP500 index. YY significantly outperformed SP500 index in May 2018, when it returned +20.89% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. YY had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -52.34%.

If all the economists were laid end to end, they'd never reach a conclusion.
-- George Bernard Shaw

YY is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in YY's volatility from 10 Sep, 2018 to 1 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 YY 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.

Investors trading in YY derivatives at this moment can consider 'Bear Put Spread' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in YY), two large cap instruments that deserve special mention are V and MSFT. They have significantly outperformed the overall market.

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