PART 3 CREATING CORRELATION MATRIX

SUBMITTED BY: Mridul Khanna Krunal Solapurwala Ekta Kochar Nistha Intwala Gunjan Bang

LIST OF ALL THE STOCKS

PHARMACEUTICAL INDUSTRY (BSE) Cadila Health Care Ltd. Cipla Ltd. Abbott Industries Ltd. Sun Pharmaceutical Industries Ltd.

TELECOMMUNICATION INDUSTRY (NSE) Bharti Airtel Ltd. Idea Cellular Ltd. Tata Communication Ltd. Reliance Communications Ltd.

OBJECTIVES
Calculation of two asset portfolio return Calculation of two asset portfolio risk

Methodology
The final value of each company of the pair were derived and added. Then weights were ascertained to each pair on basis of total and pro-rata basis.

After that Rs.10,00,000 were ascertained to these pairs according to weights by multiplying weights with 10,00,000. Then the portfolio risk was calculated.

Calculation of portfolio risk

[Wa2 (a)2]+[Wb2(b)2]+[2WaWb COVab]

formula was used to calculate

portfolio risk. Chart was made using portfolio risk and portfolio return of each pairs. Standard deviation of each portfolio was compared to portfolio risk of the same. Standard deviation should be greater then the portfolio risk that gives an interpretation that the portfolio will give high return with lesser risk.