2/13/2024 0 Comments Maximum drawdown stock screener![]() Introducing a stop loss can reduce periods of negative returns and lower maximum drawdowns. This strategy is an automated one and did not have a stop loss set, so the drawdowns show the maximum loss potential under this approach. The term maximum drawdown represents the biggest observed loss from a portfolio’s peak to its lowest point before a new peak is attained. The strategy had its maximum drawdown of 29.9% in Q1FY23. It also outperformed the Nifty 500 index in 30 of these 42 quarters. The data reveals that this approach delivered positive returns in 29 out of 42 quarters. The heatmap presents a period analysis, showcasing the strategy's quarterly returns from Q1FY14 to Q2FY24. In contrast, the benchmark’s CAGR stands at 14.5 %. The screener has given cumulative returns of 2,772.8% over 10 years and 6 months, with a CAGR of 37.4%. The screener backtest checks for past returns generated, and ran from March 2013 to September 2023, evaluating this strategy’s quarterly performance against the Nifty 500 benchmark. It is optimised to highlight the top five stocks with the highest durability scores. This screener selects stocks from the Nifty 500 index that show strong financial durability, reasonable valuation, and positive momentum scores. In this edition of Chart of the Week, we analyse one DVM screener - the ‘ DVM - High Performing, Highly Durable Companies’ screener. With these scores, investors are able to shortlist higher quality stocks for investing. The DVM score, for example, looks at several metrics across management quality, financial health, stock valuation, as well as several dozen technicals, to identify high-scoring stocks. One way to maximize returns is via screeners that automatically search for stocks that outperform on not one, or two but multiple metrics. The reality of the stock market however, is that it is volatile, and there will be periods of negative as well as positive returns. Often, you will find ‘finfluencers’ on youtube claiming market-beating returns every time they invest. Managing a portfolio that consistently outperforms its benchmark over time is a feat achieved by very few. Investors are constantly on the lookout for investment strategies that deliver outsize returns.
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