Biotechnology THEME

1733.19 -33.93 (-1.96%) Sell

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Are you evaluating investing in BIOTECHNOLOGY THEME? Avoid as it was among the worst performers

14 min read

Biotechnology was among the worst performers today. It lost -1.96% to close at 1733.19. It's recent 5 day performance has been -1.45%, -0.93%, -2.3%, +2.11% and +0.33%.

[Theme constituents]

~BIOTECHNOLOGY showed a strong down trend over the last 3 months. During this period ~BIOTECHNOLOGY lost -11.98% and saw a maximum drawdown of -16.04%. There were 3 short signals during this period that returned a cumulative of +4.23% to investors.


~BIOTECHNOLOGY has been underperforming the SP500 index in recent time, after having outperformed till 30 Aug, 2018. Over the last 2 years and 11 months, ~BIOTECHNOLOGY outperformed the SP500 index on 51% days.

During the last three months ~BIOTECHNOLOGY was mostly loss making and delivered on average -0.18% per day. It's best return during this period (of +4.63%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -6.15%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -10.97% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 7 Nov, 2018. This bullish trend delivered +10.22% to investors.

~BIOTECHNOLOGY had 7 profitable and 5 loss making months over the last year. During the last year, ~BIOTECHNOLOGY underperformed SP500 index on monthly return basis. ~BIOTECHNOLOGY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -13.12% compared to -7.75% returned by SP500 index in Dec 2018. ~BIOTECHNOLOGY had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both ~BIOTECHNOLOGY and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Finance is a gun. Politics is knowing when to pull the trigger.

~BIOTECHNOLOGY 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 ~BIOTECHNOLOGY's volatility from 19 Sep, 2018 to 1 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~BIOTECHNOLOGY 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.

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

On a general note (since you are interested in ~BIOTECHNOLOGY), two instruments that deserve special mention are NFEC and DFBG. They have significantly outperformed the overall market this year.

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