Monthly Archives: April 2014

Track the market opportunities with the new T-Advisor tool

“T-Advisor market opportunities” is a tool that shows some good options in different international markets that our system has detected through quantitative criteria. The investor can track the market opportunities found in the last 10 weeks. If he or she reviews the opportunities of this period, the information displayed is always updated.

What does it mean? T-Advisor is active and shows steadily the last figures. Amongst the provided data, the system proposes entry prices and stop-losses for these opportunities. The defined entry price is the activation price for the tool: if the share reaches that point, T-Advisor acts as it has bought it and takes a “long” position. We have already written about it.

This information is very interesting for investors, as they have an immediate reference about the prices to be considered for their investments. But what about the subsequent evolution? T-Advisor reports about the dates for the maximum benefit and the 5%-10%-15% targets, always with the reference of the entry price.

Track the market opportunities: targets in T-Advisor

With this information, the investor has the real data about how much he or she could have earned if the share entry price had been considered. He or she has also a reference for the position trend.

Track the market opportunities: T-Advisor chart

Let’s do a practical exercise: take a look at Bradesco in the pictures above. The current price is €10.76 and the entry price was €9.96. In the first picture, it is possible to see that the 5% target was reached at April, the 4th, but the share kept on increasing till April, the 8th, when the 10% target was also beat.

Why is it a help for the investor? Because it reports automatically about some psychological points. Moreover, it provides direct information without efforts. The investor has no need to calculate, but the system gives it to him or her. Again, T-Advisor designs practical solution to track your investments.

High frequency trading: Any risk for small investors?

High frequency trading: chart

High frequency trading has emerged in last weeks as a debate issue after the publishing of the book “Flash boys” by Michael Lewis. The author defends that these machines rig the markets and modify the trading affecting negatively to investors. Let’s go step by step.

High frequency trading (HTF) is made by computers. They are programmed with complex algorithms to buy and sell taking advantage of milliseconds. They detect orders and operate before their execution to profit cents… multiplied by millions of shares.

The discussion goes around if this is completely legal. A study made by an American university asserts that regulatory proposals have “unclear definitions of HTF that fail to differentiate it from algorithmic trading and other technology driven markets”, but, on the contrary, there is little evidence “that a market failure exists requiring additional aggressive regulation of HFT”.

Are there any advantages? Supporters explain that HTF fuels liquidity in the markets and they are taking advantage of a spread between these millisecond price differences, something not new in the markets, which are always working with this spread to get benefits. On the other hand, critics point out that it means a price manipulation and machines have sometimes mistakes that causes big troubles as it did on May, the 6th, last year in New York, when the Dow Jones sank a 9% and companies as P&G lost a 31% in four minutes.

But what about you, small investor and T-Advisor subscriber? Experts agree that influence in little orders is very limited. HTF operates to take earnings from very big orders in very short-term (milliseconds), but the small investor has actually no perception with an order every month of, for instance, $10,000. However, they also defend a better regulation to control what is legal and not, avoiding loopholes in the laws.

Market opportunities by T-Advisor: Sigdo Koppers

T-Advisor, through its tool Market Opportunities, has detected the company Sigdo Koppers, listed in Santiago de Chile Exchange, as an opportunity for investment.

These are the main figures about performances and volatility in the last years:

Sigdo Koppers main data in T-Advisor

The technical analysis reveals also more data:

Sigdo Koppers technical analysis in T-Advisor

The chart shows the evolution i the last year:

Sigdo Koppers chart in T-Advisor

Finally, the risk analysis is as follows:

Sigdo Koppers risk analysis in T-Advisor

Sigdo Koppers is an industrial conglomerate, leading provider of services and products to the Mining and Industry. It has operations in North and Latin America, Europe, Asia and presence worldwide through its services and products. The main business areas are services for industries, industrial products and machinery and car making.

Danger: correlated assets

Correlation is a statistical concept. It shows the relationship between two variables. In our case, it measures if two or more assets move in the same direction when one of them changes. For instance, if you have two companies from the oil sector in your portfolio, it is very possible that both increase their prices at the same time, if the oil barrel is more expensive.

However, it is difficult to detect for many investors. Very correlated assets in the portfolio increase the risks of losing money. It is similar to put all the eggs in the same nest. But there are some helps to avoid these risks. The first one is the correlation ratio. It varies between -1 and 1. If the figure is near to 1, there is a high correlation. If it is near to -1, there is an inverse correlation (when the price of one asset changes, the other changes in the opposite way). If it is near to 0, there is no correlation.

Portfolio with figures of correlation in T-Advisor

The assets in the picture have a high correlation. This portfolio is very risky. A defensive proposal would look for non-correlated assets or even with inverse correlated.

A second hint to detect correlations is diversification. It is important to have a good asset allocation. VaR also provides some clues, over all if you have the “Diversification benefit” tool. We have already published a post about it.

Diversification benefit and portfolio risk charts in T-Advisor

T-Advisor has also a tool that measures the portfolio diversification and suggests changes to reduce the risks.

Diversification ratio in T-Advisor

Last idea to discover correlations and take decisions to avoid it is the portfolio optimization. T-Advisor has the tool “Optimizer” to find correlated and non-correlated assets. The tool recommends positions to be reduced or enlarged. So, the investor has the chance to improve the risk and performance.

Optimization portfolio in T-Advisor

To sum up, correlation is a measure about our portfolio risks and our diversification. A high correlation is always a warning signal, because it is possible that you get a positive trend in a period, but… what about if the trend is negative?

Aeronautical industry, always dominate the same

Aeronautical industry has traditionally three main players: Boeing and Lockheed Martin in the US and EADS in Europe. Specifically, Boeing and EADS-Airbus are the main competitors in the civil sector, while Lockheed Martin and the military branch of EADS are the main competitors in the defense sector.

In the commercial side, there is a great development because of the rise of Asian and Middle East companies (mainly, China, Qatar and Emirates) as low cost companies (more in Europe). Both Boeing and EADS-Airbus have launched in the last years new projects for bigger aircrafts.

In defense, the increase of new powers has discovered new competitors for Lockheed Martin and EADS. One of the most important is Brazil, with Embraer and Helibras. This country is the biggest producer of helicopters and the trend in aerospace is very powerful.

Some general trends of the sector were exposed by Deloitte and KPMG in the last months.

But what is happening to the big three in the markets? Let’s have a look in T-Advisor.

Aeronautical: Boeing figures in T-Advisor

Boeing increased its revenues a 6% in 2013, till US$ 86,623 million. The net earnings also jumped an 18%, till US$ 4,285 million (US$ 5,96 per share).

Aeronautical: EADS figures in T-Advisor

EADS improved its sales a 5%, till €59,256 million. The net income in 2013 was €1,465 million, a 22% more (€1,85 per share).

Aeronautical: Lockheed Martin figures in T-Advisor

Lockheed Martin suffered a decrease in the sales (-4%), till US$45,358 million. However, the net income improved an 8.5%, till US$2,981 million (US$9.13 per share).

The comparison in the main date made by T-Advisor has the following results:

Performance

YTD

Volatility

YTD

Score

Liquidity

VaR

1 week

Boeing

-6.28%

21.43%

5.64

10

-4.28%

EADS

-8.03%

24.54%

6.25

9

-6.10%

Lockheed Martin

7.80%

18.61%

5.57

10

-3.82%

Only Lockheed Martin has a positive development in 2014 against its rivals. The score is medium, what shows the instability in some of the considered ratios. VaR also is quite high for EADS, a measure linked with the volatility, which is quite high for all. Investors don’t seem to be very motivated, although the expectations for the sector are right, but it will be interesting to watch the emerging markets in this industry and the role that these new competitors will play.

Market opportunities by T-Advisor: Balder

T-Advisor, through its tool Market Opportunities, has detected the company Balder, listed in OMX Stockholm as an opportunity for investment.

These are the main figures about performances and volatility in the last years:

Balder main data in T-Advisor

The technical analysis reveals also more data:

Balder technical analysis in T-Advisor

The chart shows the evolution i the last year:

Balder chart in T-Advisor

Finally, the risk analysis is as follows:

Balder risk analysis in T-Advisor

Fastighets AB Balder is a real estate group created in 2005. The company acquires, exploits and manages around 500 residential properties and commercial properties. The incomes in 2013 were SEK 1,884 million and the net profit summed up SEK 1,738 million. Its activity expanded recently to renewable energy (wind turbines).

Diversification protects against risks

The title sentence sounds quite radical, but there is a truth behind these words. Usually, portfolios are composed by different kind of assets. Every analyst, every advisor always recommends a diversified portfolio with fixed income assets, stocks, commodities… But the question is: ok, everybody says that, but how much do I earn for the diversification.

The answer is simple: T-Advisor has the tool for it. Do you remember an older post about value at risk (VaR)? This measure shows the probability that your portfolio loses a maximum percentage in a period (week, month or year). To complete this information, T-Advisor has available a tool called “diversification benefit”.

Diversification benefit tool in T-Advisor

Look at the picture above. The item compares the difference between the decision of diversifying or not the portfolio. Through complex statistical calculations, T-Advisor reports the investor about the money he or she could lose if his or her assets would be not diverse enough. In this example, this portfolio has an 8.21% VaR 1 year. If this portfolio would not be diversified, he risk would increase till 12.07%. This investor could have 4 points more risk of losing money.

Portolio risk analysis in T-Advisor

This figure has to be linked with other T-Advisor tools and data. For instance, the picture before reports about the volatility and the effect of a diversified portfolio with that volatility.

Diversification suggestions in T-Advisor

 

In this case, T-Advisor has a follow up analytics. This chart has a report about diversification. In this example, the tool says that the diversification is low. With this low diversification, VaR is high (8.21%), but it would be worse with any diversification. The difference between diversified and undiversified VaR would be surely higher, if this portfolio had more different assets.

There are mantras amongst experts and advisors, such as “you have to diversify your portfolio”, but nobody measures with figures this advantage. T-Advisor does it and reports its users about it. Data and figures about our portfolio like this mean less chances of losing money.

World global trends: markets in March

An approach to global trends in March has to take into account the last US Federal Reserve meeting. Janet Yellen began her term making some changes from Bernanke’s heritage. She prefers to look more the job statistics before an increase in the interest rates. This announcement moved the market, mainly in the US.

Global markets in march

Our chart shows that 40% stocks have a bullish trend in the US, against the 36% in February. The chart below is clearer: the trend in the biggest world economy is more positive. The prices were low in February and that point attracted investors, together with the Fed outlook.

US Global Trend in T-Advisor

On the other side, emerging markets are still quite bearish. In LatAm the trend seems to improve, but the original point was so low that it will take still some time till the positions show a higher point. However, the line up appears to be solid, as it accounts a 23% against a 13% in February.

LatAm Global Trends in T-Advisor

But the more interesting development took place in Asia. Although the general trend in the continent is bearish, there is a jump in two countries to the top bullish positions: India and Indonesia. The reason lays on the elections. Both countries have elections in the beginning of April and the perspective is that new governments will be more “business-friendly” as their predecessors. The Indian and Indonesian stocks exchanges experienced in the last week a soar: more than 50% of the companies have a bullish trend.

Asia Global Trends in T-Advisor

This situation in Asia is an exception, because the other main Asian stocks are in the lowest positions: China has less than 10% bullish; Hong Kong and Japan, less than 20%; and Singapore, less that 30%.

Generally, stocks have chances to increase in the next months, as the beginning point is very low. Experts comment that April is a typical bullish month. Let’s see what we discover in four weeks.

Market opportunities by T-Advisor: NGK Insulators

T-Advisor, through its tool Market Opportunities, has detected the company NGK Insulators, listed in Tokyo as an opportunity for investment.

These are the main figures about performances and volatility in the last years:

Main data NGK Insulators in T-Advisor

The technical analysis reveals also more data:

Technical analysis NGK Insulators in T-Advisor

The chart shows the evolution i the last year:

NGK Insulators Chart in T-Advisor

Finally, the risk analysis is as follows:

Risk analysis NGK Insulators in T-Advisor

NGK Insulators is an industrial company specialized in electrical insulators, electric energy products and fine ceramics for electronics. In the last financial report (March 2013), the company obtained a net income of JP¥ 11.4 billion against the net loss in the former year.

T-Advisor ranking: the best in Q1

How was the first quarter of the year for your investments? T-Advisor publishes its ranking with the best stocks in the main world indexes taking into account its score. T-Advisor score is a specific tool developed by our company. It is calculated combining several ratios, mainly performance and risks.

New York Dow Jones Industrial Average has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Walt Disney

9.4

6.76%

18.17%

-1.84%

-3.11%

Du Pont de Nemours

8.85

4.29%

17.07%

-1.85%

-3.52%

Unitedhealth

8.6

8.68%

19.54%

-1.96%

-5.07%

American Express

8.3

0.48%

18.51%

-1.97%

-4.95%

Microsoft

8.26

10.71%

26.28%

-2.13%

-5.45%

The ranking shows the richness of the American economy: there are companies from very different branches, as cinema, technology, health, finances or chemicals.

FTSE 100 in London has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Weir Group

9.81

17.57%

25.55%

-2.77%

-4.34%

Bunzl

9.76

10.77%

14.16%

-1.34%

-2.30%

Kingfisher

9.73

11.80%

22.44%

-1.92%

-4.35%

Whitbread

9.65

12.87%

19.21%

-2.08%

-3.30%

Next

9.22

22.56%

16.81%

-1.54%

-2.22%

Surprisingly, the best scores in London are linked to companies from retail, consumer and essential supplies.

DAX 30 in Germany has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Infineon Technology

9.87

13.71%

27.19%

-2.65%

-6.11%

BMW

9.63

8.06%

25.70%

-1.93%

-5.26%

Continental

9.22

10.79%

23.87%

-2.32%

-6.20%

Lanxess

8.75

14.03%

31.61%

-2.96%

-8.27%

Daimler AG

8.22

10.89%

27.41%

-2.30%

-5.88%

German technology, chemicals and car branches are at the top of our ranking.

IBEX 35 in Spain has the following best stocks ranked by our score:

Score

Perf. Q1

Volatility

VaR day

VaR week

Jazztel

10

41.85%

22.22%

-2.05%

-3.72%

Grifols

8.66

15.80%

22.24%

-2.32%

-4.90%

Grupo Ferrovial

8.62

12.94%

19.71%

-1.65%

-5.16%

Bankinter

8.31

19.33%

33.46%

-3.44%

-7.30%

Red Eléctrica

8.14

21.87%

23.32%

-1.74%

-4.52%

In Spain, Jazztel is at the very top profiting the consolidation in the telecommunication branch in this country. The performance of this share anticipates a possible merge with other company.