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Rm Rm - Rm' Rm - Rm' ^ 2
2011 11347.66 -0.05612828 -0.18489 0.034184041
2010 12022.46 0.28076728 0.152006 0.0231059142009 9386.92 0.60049514 0.471734 0.222533112
2008 5865.01 -0.583366958 -0.71213 0.507126208
2007 14077.16 0.402037747 0.273277 0.074680188
2006 10040.5 0.050634064 -0.07813 0.006103816
2005 9556.61 0.536827801 0.408067 0.166518526
2004 6218.4 0.39064317 0.261882 0.068582278
2003 4471.6 0.655283722 0.526523 0.277226192
2002 2701.41 1.121981682 0.993221 0.986487351
2001 1273.06 -0.155566169 -0.28433 0.080841931
2000 1507.59
Total 3.243609201 1.827238 2.447389556
Market Data
We are taking the 'KSE-100 Index' as proxy of market.
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0
2000
4000
6000
8000
10000
12000
14000
16000
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Market Index
Market Index
0
2000
4000
6000
8000
10000
12000
14000
16000
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Market Return Trend
Market Return
-2000
0
2000
4000
6000
8000
10000
12000
14000
16000
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Market Index & Return Trend
KSE 100 Index
KSE 100 Index Return
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Mean Return
(Rm')=
Variance=
= 0.489477911
Standard Deviation=
0.69962698
9.28%
3%
0.128760986
SQRT (Variance)
E(R - R') ^ 2 / n
=
This is the arithmetic average of daily returns of market of the past 5 years. We are using this mean as the
expected future returns from this security because this is the best estimate that we can make from
historical data.
Risk Free Rate of Return (As
on short term T-Bills) =
Market Risk Premium
(Assumed)=
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Return R - R' (R - R')(Rm - Rm') R - R' ^ 2
2011 34.2 -0.085805934 -0.26273 0.04857533 0.069025271
2010 37.41 0.203667954 0.026747 0.004065755 0.0007154172009 31.08 1.20581973 1.028899 0.485366825 1.058633265
2008 14.09 -0.538032787 -0.71495 0.509138339 0.511158453
2007 30.5 0.105072464 -0.07185 -0.019634447 0.005162166
2006 27.6 0.15 -0.02692 0.00210323 0.000724723
2005 24 -0.252336449 -0.42926 -0.175165588 0.184261679
2004 32.1 -0.165149545 -0.34207 -0.089582096 0.117012036
2003 38.45 -0.041147132 -0.21807 -0.114817659 0.047553569
2002 40.1 1.587096774 1.410176 1.400616086 1.988596629
2001 15.5 -0.223057644 -0.39998 0.113724697 0.159982656
2000 19.95
Total 1.946127431 0 2.164390472 4.142825863
Hub Power
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0
5
10
15
20
25
30
35
40
45
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price Trend
Share Price
-1
-0.5
0
0.5
1
1.5
2
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Return Trend
Return
-5
0
5
10
15
20
25
30
35
40
45
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price & Return Trend
Share Price
Return
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Mean Return
(R') = 0.176920676
Variance= E(R - R') ^ 2 / n
= 0.376620533
SQRT (Variance)
= 0.613694169
Coefficient of
Variation= Standard Deviation / Mean Return
= 3.468753254
Beta=
= 0.401984984
Covariance
with market=
= 0.19676277
RRR using
CAPM= Rf + (Rp)B
= 10.48%
The required rate of return is the same as the risk free rate of return. This is because the beta is 0.
Standard Deviation=
Cov-i,m / Var-m
E [ (Ri-Ri') * (Rm-Rm') ] / n
This is the arithmetic average of daily returns from this security of the past 5 years. We are using this
mean as the expected future returns from this security because this is the best estimate that we can make
from historical data.
This is the risk of the security.
This is the risk per unit of return of this security. An individual security among many securities is selected
on this basis. The lower the Coefficient of Variance is, the lower is the risk per unit of return.
The beta of this security is between 0 and 1. This meas that the risk of the security is less than the risk of
the market and the security movement is in the same direction as of the market.
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Return R - R' (R - R')(Rm - Rm') R - R' ^ 2
2011 5,565.80 0.276509861 0.059183 -0.01094224 0.003502588
2010 4,360.17 0.895726087 0.678399 0.103120902 0.460225062009 2,300.00 0.272327973 0.055001 0.025945747 0.003025086
2008 1,807.71 -0.207162124 -0.42449 0.302290704 0.180191179
2007 2,280.05 0.140025 -0.0773 -0.021124893 0.005975629
2006 2,000.00 0.126760563 -0.09057 0.007075692 0.008202314
2005 1,775.00 0.203389831 -0.01394 -0.005687375 0.00019425
2004 1,475.00 0.018646409 -0.19868 -0.052030958 0.039474054
2003 1,448.00 0.196694215 -0.02063 -0.010863732 0.00042572
2002 1,210.00 0.592105263 0.374778 0.372237336 0.140458602
2001 760 -0.124423963 -0.34175 0.097169134 0.116793852
2000 868
Total 2.390599115 0 0.807190317 0.958468335
Unilever
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0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price Trend
Share Price"
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Return Trend
Return
-1,000.00
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price & Return Trend
Share Price
Return
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Mean Return
(R') = 0.217327192
Variance= E(R - R') ^ 2 / n
= 0.087133485
SQRT (Variance)
= 0.295183816
Coefficient of
Variation=Standard Deviation / Mean Return= 1.35824612
Beta=
= 0.149916751
Covariance
with market=
= 0.073380938
RRR using
CAPM= Rf + (Rp)B
= 9.73%
The required rate of return is the same as the risk free rate of return. This is because the is 0.
Standard Deviation=
Cov-i,m / Var-m
E [ (Ri-Ri') * (Rm-Rm') ] / n
This is the arithmetic average of daily returns from this security of the past 5 years. We are using this
mean as the expected future returns from this security because this is the best estimate that we can make
from historical data.
This is the risk of the security.
This is the risk per unit of return of this security. An individual security among many securities is selected
on this basis. The lower the Coefficient of Variance is, the lower is the risk per unit of return.
The beta of this security is between 0 and 1. This meas that the risk of the security is less than the risk of
the market and the security movement is in the same direction as of the market.
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Return R - R' (R - R')(Rm - Rm') R - R' ^ 2
2011 3,597.11 0.514661917 0.129585 -0.023958878 0.016792276
2010 2,374.86 0.906048348 0.520971 0.079190939 0.2714112462009 1,245.96 -0.065646794 -0.45072 -0.212621762 0.203151852
2008 1,333.50 -0.259166667 -0.64424 0.458783849 0.415049778
2007 1,800.00 0.8 0.414923 0.11338884 0.172161176
2006 1,000.00 0.298701299 -0.08638 0.00674826 0.007460745
2005 770 0.480911626 0.095835 0.03910697 0.009184294
2004 519.95 0.382845745 -0.00223 -0.000584301 4.97807E-06
2003 376 0.720823799 0.335747 0.176778374 0.112725978
2002 218.5 0.456666667 0.07159 0.071104434 0.005125094
2001 150 0 -0.38508 0.10948782 0.148284222
2000 150
Total 4.235845939 -5.6E-16 0.817424545 1.361351638
Nestle Pakistan
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0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price Trend
Share Price
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Return Trend
Return
-500.00
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price & Return Trend
Share Price
Return
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Mean Return
(R') = 0.385076904
Variance= E(R - R') ^ 2 / n
= 0.12375924
SQRT (Variance)
= 0.351794315
Coefficient of
Variation=Standard Deviation / Mean Return= 0.913568982
Beta=
= 0.151817519
Covariance
with market=
= 0.074311322
RRR using
CAPM= Rf + (Rp)B
= 9.73%
The required rate of return is the same as the risk free rate of return. This is because the is very near to 0.
Standard Deviation=
Cov-i,m / Var-m
E [ (Ri-Ri') * (Rm-Rm') ] / n
This is the arithmetic average of daily returns from this security of the past 5 years. We are using this
mean as the expected future returns from this security because this is the best estimate that we can make
from historical data.
This is the risk of the security.
This is the risk per unit of return of this security. An individual security among many securities is selected
on this basis. The lower the Coefficient of Variance is, the lower is the risk per unit of return.
The beta of this security is between 0 and 1. This meas that the risk of the security is less than the risk of
the market and the security movement is in the same direction as of the market.
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Return R - R' (R - R')(Rm - Rm') R - R' ^ 2
2011 818.4 0.18754988 -0.3302 0.061050831 0.109033452
2010 689.15 -0.296067416 -0.81382 -0.123705676 0.6623020712009 979 0.310575636 -0.20718 -0.097732175 0.042922053
2008 747 0.538778453 0.021026 -0.014973512 0.000442111
2007 485.45 2.595925926 2.078174 0.567916635 4.318806792
2006 135 0.5 -0.01775 0.001386911 0.000315134
2005 90 0.267605634 -0.25015 -0.102076438 0.062573213
2004 71 0.392156863 -0.1256 -0.032891134 0.015774143
2003 51 0.616481775 0.09873 0.051983462 0.009747565
2002 31.55 0.37173913 -0.14601 -0.145023022 0.021319763
2001 23 0.210526316 -0.30723 0.08735261 0.094387632
2000 19
Total 5.695272197 0 0.25328849 5.337623929
Bata
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0
200
400
600
800
1000
1200
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price Trend
Share Price
-0.5
0
0.5
1
1.5
2
2.5
3
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Return Trend
Return
-200
0
200
400
600
800
1000
1200
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price & Return Trend
Share Price
Return
7/30/2019 Individual and Portfolio Analysis of 10 securities
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Mean Return
(R') = 0.517752018
Variance= E(R - R') ^ 2 / n
= 0.485238539
SQRT (Variance)
= 0.696590654
Coefficient of
Variation=Standard Deviation / Mean Return= 1.345413692
Beta=
= 0.047042422
Covariance
with market=
= 0.023026226
RRR using
CAPM= Rf + (Rp)B
= 9.42%
The required rate of return is the same as the risk free rate of return. This is because the is 0.
Standard Deviation=
Cov-i,m / Var-m
E [ (Ri-Ri') * (Rm-Rm') ] / n
This is the arithmetic average of daily returns from this security of the past 5 years. We are using this
mean as the expected future returns from this security because this is the best estimate that we can make
from historical data.
This is the risk of the security.
This is the risk per unit of return of this security. An individual security among many securities is selected
on this basis. The lower the Coefficient of Variance is, the lower is the risk per unit of return.
The beta of this security is between 0 and 1. This meas that the risk of the security is less than the risk of
the market and the security movement is in the same direction as of the market.
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Return R - R' (R - R')(Rm - Rm') R - R' ^ 2
2011 2,513.28 0.191201354 -0.10207 0.018871684 0.010418325
2010 2,109.87 0.420787879 0.127516 0.019383285 0.0162604142009 1,485.00 -0.376422471 -0.66969 -0.315917542 0.448490082
2008 2,381.42 0.056062084 -0.23721 0.168923489 0.056268331
2007 2,255.00 1.505555556 1.212284 0.331289047 1.469632509
2006 900 0.285714286 -0.00756 0.000590426 5.71122E-05
2005 700 0.129032258 -0.16424 -0.067020605 0.026974545
2004 620 0.24 -0.05327 -0.01395087 0.002837858
2003 500 0.612903226 0.319632 0.168293344 0.102164408
2002 310 0.033333333 -0.25994 -0.258176017 0.067567877
2001 300 0.127819549 -0.16545 0.047042497 0.027374365
2000 266
Total 3.225987053 0 0.099328737 2.228045826
Rafhan Maize Products
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0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price Trend
Share Price
-0.5
0
0.5
1
1.5
2
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Return Trend
Return
-500
0
500
1000
1500
2000
2500
3000
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Share Price & Return Trend
ReturnShare Price
7/30/2019 Individual and Portfolio Analysis of 10 securities
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Mean Return
(R') = 0.29327155
Variance= E(R - R') ^ 2 / n
= 0.202549621
SQRT (Variance)
= 0.450055131
Coefficient of
Variation=Standard Deviation / Mean Return= 1.534602078
Beta=
= 0.018447993
Covariance
with market=
= 0.009029885
RRR using
CAPM= Rf + (Rp)B
= 9.33%
The required rate of return is the same as the risk free rate of return. This is because the is 0.
Standard Deviation=
Cov-i,m / Var-m
E [ (Ri-Ri') * (Rm-Rm') ] / n
This is the arithmetic average of daily returns from this security of the past 5 years. We are using this
mean as the expected future returns from this security because this is the best estimate that we can make
from historical data.
This is the risk of the security.
This is the risk per unit of return of this security. An individual security among many securities is selected
on this basis. The lower the Coefficient of Variance is, the lower is the risk per unit of return.
The beta of this security is between 0 and 1. This meas that the risk of the security is less than the risk of
the market and the security movement is in the same direction as of the market.
7/30/2019 Individual and Portfolio Analysis of 10 securities
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Summary of Individual Securities
Mean Return Standard Deviation Coefficient of Variance Beta RRR
Hub Power 0.176920676 0.613694169 3.468753254 0.401984984 10.48%
Unilever 0.217327192 0.295183816 1.35824612 0.149916751 9.73%
Nestle 0.385076904 0.351794315 0.913568982 0.151817519 9.73%
Bata 0.517752018 0.696590654 1.345413692 0.047042422 9.42%
Rafhan Maize 0.29327155 0.450055131 1.534602078 0.018447993 9.33%
Best Security Bata Unilever Nestle Rafhan Maize
Because it has
the highest
mean return
Because it has the
lowest Standard
Deviation
Because it has the lowest
Coefficient of Variation
Because it has
the lowest risk
as compared
to the market
0
0.5
1
1.5
2
2.5
3
3.5
4
Hub Power Unilever Nestle Bata Rafhan Maize
Mean Return
Standard Deviation
Coefficient of Variance
Beta
RRR
7/30/2019 Individual and Portfolio Analysis of 10 securities
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0.5
0.5
= 19.71%
19.71%
Variance=
= 0.505089445
Standard Deviation= SQRT (Variance)
= 0.710696451
71.07%
Covariance=
= 0.101300906
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
0.559202097
Portfolio 1: Hub Power & Unilever
The correlation of Hub Power & Unilever is approximately 0.6. This means that these two securities are
moderately correlated, they move moderately in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
1.114309969
The risk of the portfolio as a whole is =
Weight of Hub Power=
Weight of Unilever=
The portfolio return of Hub Power & Nestle is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 28.10%
28.10%
Variance=
= 0.486864442
Standard Deviation= SQRT (Variance)
= 0.697756721
69.78%
Covariance=
= 0.0082404
( R1 - R1' ) ( R2 - R2' )
Total 0 -5.55112E-16
Correlation=
=
0.03816871
Portfolio 2: Hub Power & Nestle
The correlation of Hub Power & Unilever is approximately 0.04 This means that these two securities
are slightly correlated, they move slightly in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
0.090644401
The risk of the portfolio as a whole is =
Weight of Hub Power=
Weight of Nestle=
The portfolio return of Hub Power & Nestle is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 34.73%
34.73%
Variance=
= 0.643039829
Standard Deviation= SQRT (Variance)
= 0.801897642
80.19%
Covariance=
= -0.024205166
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
-0.056621115
Portfolio 3: Hub Power & Bata
The correlation of Hub Power & Unilever is approximately -0.06. This means that these two securities
are slightly negatively correlated, they move slightly in the opposite direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
-0.266256821
The risk of the portfolio as a whole is =
Weight of Hub Power=
Weight of Bata=
The portfolio return of Hub Power & Bata is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 23.51%
23.51%
Variance=
= 0.492898156
Standard Deviation= SQRT (Variance)
= 0.702067059
70.21%
Covariance=
= -0.077952988
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
-0.282237717
Portfolio 4: Hub Power & Rafhan Maize
The correlation of Hub Power & Unilever is approximately -0.3. This means that these two securities
have low negative correlation, they move weakly in the opposite direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
-0.857482865
The risk of the portfolio as a whole is =
Weight of Hub Power=
Weight of Rafhan Maize=
The portfolio return of Hub Power & Rafhan is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 30.12%
30.12%
Variance=
= 0.356949937
Standard Deviation= SQRT (Variance)
= 0.597452874
59.75%
Covariance=
= 0.066921743
( R1 - R1' ) ( R2 - R2' )
Total 0 -5.55112E-16
Correlation=
=
0.768037032
Portfolio 5: Unilever & Nestle
The correlation of Hub Power & Unilever is approximately 0.8. This means that these two securities are
highly correlated, they move strongly in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
0.736139176
The risk of the portfolio as a whole is =
Weight of Unilever=
Weight of Nestle=
The portfolio return of Unilver & Nestle is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 36.75%
36.75%
Variance=
= 0.465236257
Standard Deviation= SQRT (Variance)
= 0.682082295
68.21%
Covariance=
= -0.061301956
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
-0.298128949
Portfolio 6: Unilever & Bata
The correlation of Hub Power & Unilever is approximately -0.3. This means that these two securities
have low negative correlation, they move weakly in the opposite direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
-0.67432152
The risk of the portfolio as a whole is =
Weight of Unilever=
Weight of Bata=
The portfolio return of Unilever & Bata is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 25.53%
25.53%
Variance=
= 0.373378563
Standard Deviation= SQRT (Variance)
= 0.611047104
61.10%
Covariance=
= 0.00151818
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
0.01142786
The correlation of Hub Power & Unilever is approximately 0.01. This means that these two have a low
correlation, they move weakly in the same direction.
Portfolio 7: Unilever & Rafhan Maize
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
0.016699976
The risk of the portfolio as a whole is =
Weight of Unilever=
Weight of Rafhan Maize=
The portfolio return of Unilever & Rafhan Maize is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 45.14%
45.14%
Variance=
= 0.551201172
Standard Deviation= SQRT (Variance)
= 0.742429237
74.24%
Covariance=
= 0.054017376
( R1 - R1' ) ( R2 - R2' )
Total -5.55112E-16 0
Correlation=
=
0.220428134
Portfolio 8: Nestle & Bata
The correlation of Hub Power & Unilever is approximately 0.2. This means that these two securities
have low correlation, they move weakly in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
0.594191136
The risk of the portfolio as a whole is =
Weight of Nestle=
Weight of Bata=
The portfolio return of Nestle & Bata is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 33.92%
33.92%
Variance=
= 0.453121442
Standard Deviation= SQRT (Variance)
= 0.673142958
67.31%
Covariance=
= 0.10439344
( R1 - R1' ) ( R2 - R2' )
Total -5.55112E-16 0
Correlation=
=
0.659354043
Portfolio 9: Nestle & Rafhan Maize
The correlation of Hub Power & Unilever is approximately 0.7. This means that these two securities are
highly correlated, they move strongly in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
1.148327835
The risk of the portfolio as a whole is =
Weight of Nestle=
Weight of Rafhan Maize=
The portfolio return of Nestle & Rafhan Maize is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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0.5
0.5
= 40.55%
40.55%
Variance=
= 0.698380797
Standard Deviation= SQRT (Variance)
= 0.835691807
83.57%
Covariance=
= 0.250115809
( R1 - R1' ) ( R2 - R2' )
Total 0 0
Correlation=
=
0.79780689
Portfolio 10: Bata & Rafhan Maize
The correlation of Hub Power & Unilever is approximately 0.8. This means that these two securities
are highly correlated, they move strongly in the same direction.
( R1 - R1' ) * (R2 - R2')
(W1 * R1) + (W1 * R2)Expected Return (ER)=
2.7512739
The risk of the portfolio as a whole is =
Weight of Bata=
Weight of Rafhan Maize=
The portfolio return of Bata & Rafhan Maize is=
[(W1*SD1)+(W2*SD2)+2(W1*W2*COV)]
E [ (R1-R1') * (R2-R2') ] / n
Covariance / (SD 1 * SD 2)
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Portfolio 3= Hub Power & BataPortfolio 4= Hub Power & Rafhan Maize
Portfolio 5= Unilever & Nestle
Portfolio 6= Unilever & Bata
Portfolio 7= Unilever & Rafhan Maize
Portfolio 8= Nestle & Bata
Portfolio 9= Nestle & Rafhan Maize
Portfolio 10= Bata & Rafhan Maize
Return Risk
19.71% 71.07%
28.10% 69.78%
34.73% 80.19%
23.51% 70.21%
30.12% 59.75%
36.75% 68.21%
25.53% 61.10%
45.14% 74.24%
33.92% 67.31%
40.55% 83.57%
Summary of Portfolio Analysis
Portfolio 1= Hub Power & Unilever
Portfolio 2= Hub Power & Nestle
All securities in each portfolio carry equal weight.
Portfolio
Portfolio 10= Bata & Rafhan Maize
Portfolio 1= Hub Power & Unilever
Portfolio 3= Hub Power & Bata
Portfolio 2= Hub Power & Nestle
Portfolio 4= Hub Power & Rafhan Maize
Portfolio 5= Unilever & Nestle
Portfolio 6= Unilever & Bata
Portfolio 7= Unilever & Rafhan Maize
Portfolio 8= Nestle & Bata
Portfolio 9= Nestle & Rafhan Maize
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
Return
Risk
Portfolio Analysis
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Decision:-
The basic purpose of portfolio is to diversify the risk. So we take decision on the basis of risk or standard
deviation of portfolio. The risk of portfolio 5 of Unilever & Nestle is less as compared to other portfolios
which is 59.75%. So being investor we choose the portfolio of Unilever & Nestle.
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