Imagine you want to look into a particular period and find out how the stocks in that index performed, generating a heatmap is one thing. But that only gives you negative or positive returns, right?
What if you want to know which stocks have risen the most amount of times in that period? That’s where the seasonality analysis tools come in. Let’s look at the tool and understand things better.
As you can see the green box highlights the universe selection section. You can choose between stocks, indices, or ETFs. Then you can further filter stocks based on your choices.
If you choose stocks, you can filter between indices or sectoral indices. You can try and test out different universes. Next, we have the Holding Period section (highlighted with green arrows). You can pick between months, and quarters or choose a custom range.
Next, we have the timeframe section highlighted in the yellow box. You can choose the number of years you want to consider for Backtest history. And min trades.
For our example, we want to see Stocks in the Nifty 500 universe. We want to analyze the February month. We will keep the backtest years as 10 and the Trades as 10. Let’s click on ‘Run’ and see the results.
As you can see the results show the Name, then the sector and industry. Highlighted in the green box are the returns. The yellow boxes show the standard deviation and return on risk. The red box highlights the minimum and maximum returns. The black box highlights the winning and losing trades.
Let’s now analyze the results. We’ll share the same image again so you don’t have to scroll up again.
As you can see the number of winning trades (higher the better) shows us that in February taking trades in the Trent can see positive returns.
The returns section tells us how much return the stock generates on average against median and also risk-related parameters. This can serve as a great tool to see if these results match your trading strategy.
However, don’t take this as a sure-shot sign. Even if a stock won 9 out of 10 trades, the number 10 in itself is very short to make a decision solely on it.
Next, we will explore the Stock tools.