What is Performance in Instrument Analysis?

Performance refers to one of the six instrument analysis tools that helps investors in performing a deeper analysis of individual stocks, ETFs, indices or investment themes. This tool compares symbols based on their monthly returns and helps investors identify patterns in performance. For example, a stock may perform well in general in the month when it’s earnings reports are published and not so well in other months. Or, a stock may deliver higher profits and higher losses on a monthly basis when compared to another stock in the same sector – indicating Beta (volatility) rather than Alpha (outperformance).

By default, the comparative performance is displayed for the NIFTY-50 and NIFTY-BANK indices. The user has the option to select one or two symbols to compare with the NIFTY-50 index. For example, in the chart shown below, the performance of CEATLTD and APOLLOTYRE is compared, along with NIFTY-50 which is the default benchmark. It is observed that CEATLTD had a shorter duration of profitable months compared to APOLLOTYRE. Specifically, CEATLTD experienced an upward trend for only three consecutive months in the past year. On the other hand, APOLLOTYRE demonstrated more consistent profitability.

Furthermore, it is interesting to note that APOLLOTYRE significantly outperforms during the months when quarterly or annual earnings are announced. This suggests that the company’s performance tends to improve noticeably during these periods.

In summary, Performance is a tool that assists investors in analysing and comparing monthly performance of different instruments, sectors, or investment themes based on their monthly returns. It allows for a comprehensive assessment of profitability and highlights any patterns or trends that may be observed.

Follow these easy steps to use Alpha Builder’s tool “Performance” to compare symbols by monthly returns:

1. On the home-page, click “Alpha Builder” or select sub-menu item “ALPHA BUILDER” under the “TOOLS” head of the “PRODUCTS” menu.
2. Scroll down the page and click on “Performance“.
3. The chart displays the comparative performance of NIFTY-50 v/s NIFTY-BANK by default.
4. Click on the left-side text-box with text as “Symbol 1“, type the symbol and click on one of the presented options.
5. Now click on the hand lens icon next to the text-box.
6. The comparative performance of the selected symbol with NIFTY-50 will be displayed chartically.
7. Click on the right-side text-box with text as “Symbol 2“, type the symbol and click on one of the presented options.
8. Now click on the hand lens icon next to the text-box.
9. The comparative performance of the two selected symbols with NIFTY-50 will be displayed chartically.

Useful Links:
Sector or Theme Performance India
How to Use Alpha Builder (YouTube)