Why LyondellBasell Has Underperformed in 2018



LyondellBasell’s 2018 stock performance

So far in 2018, LyondellBasell (LYB) has underperformed some of its peers and also the broader market. As of March 23, 2018, LYB has fallen 5.2% since the beginning of 2018. 

LYB’s peers Westlake Chemical (WLK) and Eastman Chemical (EMN) have risen 5.7% and 11.0%, respectively, while Olin (OLN) has fallen 14.7% in the same period.

The fall in LYB’s stock price can mainly be attributed to the volatility prevailing in the stock market due to the ongoing trade wars related to tariffs and political tensions. 

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LYB has a beta of 1.3 which indicates that it’s a high beta stock, and negative market sentiments have resulted in the stock’s falling more than the broader market itself. Positive business developments, including LYB increasing its quarterly cash dividend by 11%, LYB and SUEZ beginning to jointly operate the acquired Quality Circular Polymers (or QCP), and LYB receiving US antitrust clearance for its Schulman acquisition, could drive the stock up.

Moving averages

The fall in LYB’s stock price has resulted in its trading 4.6% below its 100-day moving average price of $109.55, indicating some weakness. LYB’s 14-day RSI (relative strength index) of 39 indicates that the stock is neither overbought nor oversold. An RSI of 70 or above indicates that a stock has temporarily moved into an overbought position, while an RSI of 30 or below indicates that a stock has temporarily moved into an oversold situation.

Investors can indirectly hold LYB by investing in the Guggenheim S&P 500 ® Equal Weight Materials ETF (RTM), which invests 4.1% of its portfolio in the stock.


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