The Interesting Outliers

Getting allocated on a running portfolio is always a hard task because you have to wait for a fresh entry. However, the ORMI approach is very simple. We look at worst outliers which should be in a positive price and Jiseki cycle trend to BUY.
The ORMI system has predefined exits, which are used to protect gains and avoid large losses. Owing to such a condition based system, most exit and entry conditions are objective and devoid of any emotion or subjectivity.
Our members have a choice either to follow the clear rules or use ORMI signals with fundamental knowledge and technical review to allocate.
Below we have looked at some stocks which are either running in the current ORMI India 30 or have been recently selected by our system as interesting negative outliers. And as you know by now negative outliers which show some positive price action are very interesting and prone to reversion.

 
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Indexing: The INDIA 30 Orpheus Risk Management Index (ORMI) is based on proprietary algorithm.
The indices values that are disseminated today are broadly based on market capitalization methodology. Market capitalization methodology has been challenged globally for a few broad reasons. 1) As an asset strengthens it is given more weight 2) As an asset weakens it is given lesser weight. This on one side captures momentum but on the other side suggests investors to focus more on growth compared to value. This increases portfolio risk when market growth slows down or reverses, as has been the case since 2007. When markets contract, the erstwhile top performers push into red for extended period of time causing large drawdowns and emotional pain.
The India 30 Index is based on the above extreme reversion idea i.e. outliers tend to reverse, which suggests that investing is about value picking and extremes are prone to reversion. Our Index extends and fine tunes the idea first mooted by De Bondt and Thaler in their 1981 paper suggesting that 3 year worst losers portfolio tends to outperform the 3 year best winners portfolio.
Coverage India: CNX100, BSE500 traded stocks and Indian Indices.

 
 
Ayushi has done her masters in economics from Delhi School of Economics and then completed her Post-Graduation in Finance from National Institute of Securities Markets. She completed her graduation in Economics from Lady Shri Ram College. A keen econometrician, Ayushi enjoys financial modeling and risk management.