EQUITY STRATEGY

How to profit from seasonality

Seasonax Capital has developed a strategy that captures seasonal trends in specific stocks and profits from their recurring nature over the course of the entire calendar year.

WHAT IS SEASONALITY?

Seasonality describes regular and predictable patterns that recur almost every calendar year. Every industry exhibits unique seasonal trends, based on solid fundamental drivers, which we are able to benefit from.

The best-known seasonal drivers include harvests, the timing of interest payments, the weather, investor sentiment at certain times of the year, as well as traditional patterns such as the year-end rally in the stock market.

Seasonal strategies generate large gains based on statistical information; emotions play no role. After many years of intensive research, Seasonax Capital has developed a strategy that captures seasonal trends in specific stocks and profits from their recurring nature over the course of the entire calendar year.

Every industry exhibits unique seasonal trends, based on solid fundamental drivers, which we are able to benefit from.

The challenge

In order to benefit from seasonal patterns in the course of an entire year, a sufficient number of statistically profitable investment opportunities have to be available at any given time. The best and most widely known seasonal trends occur only over a limited number of time periods in the course of a year.

In order to broaden the number of investable signals to the degree needed to be able to invest at all times, it is necessary to evaluate a large amount of historical data on every single stock and create algorithms to identify worthwhile seasonal patterns.

Novo Nordisk, Seasonal Average over the last 15 years.

Single stock exhibits distinct seasonal trends.

Source: Seasonax

Adidas, Seasonal Average over the last 15 years.

By shifting funds between different stock based on the timing of their strongest seasonal trends, it is possible to generate large cumulative gains

Source: Seasonax

STRATEGIC APPROACH

IIndividual stocks exhibit distinct seasonal patterns, which are either attributable to internal business reasons, or to various external factors affecting their prices.

By screening different stock indices and their constituents, we are able to identify and evaluate these single stock patterns. This enables us to switch from one stock to the next, exploiting the timing of the respective favorable seasonal trends and reap the benefits from the associated outperformance.

Focusing sequentially on the strongest seasonal periods in specific stocks in the course of the year will result in compounding returns.

Visualization of rolling from one stock to the next. This method will tend to compound returns in the course of the year.

Source: Seasonax

The combination of seasonal pattern insights and fully developed products enables us to optimize portfolios by applying precise market timing based on robust statistical data.

Products

We have implemented our algorithms in commodity and equity strategies: