Smallcap momentum portfolio

@kuldeep_agarwal Hello Kuldeep

There are many ways to follow Momentum investing. You are following what is comfortable for you. There is nothing wrong.

There are some differences between the way we do.

1. My look back period is 1 year and 6 months. Your look back period is 3 months. In all the literature that I have seen, the optimum period is between 6m and 1 year.
2. I don’t look at returns in comparison to Index. I just go for absolute returns and sort them. I look at both 6 months and 1 year and give equal weightage for both.
3. To ensure that volatility is not affecting the portfolio, I divide the returns by Standard Deviation and then sort them.

In my portfolio I have 20 stocks against your 15 stocks. Again, nothing wrong. But having more stocks reduces the volatility of the overall pf.

You are using two factors – 3m returns and stocks near 52w high. See what benefit you get with this additional factor (52w high). Normally, more factors you have, reduces the overall returns of the pf.

These are some of my observations.