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INTRODUCTION
The financial market is the driver of the economic growth and development of any country. A sound financial market can take the country to the apex. Financial resources were by allocating through one of the ways such as portfolios, which are combination of various securities. Portfolio analysis includes analyzing the range of possible portfolios that can be constituted from a given set of securities.
A combination of securities with different risk return characteristics will constitute the portfolio of the investor. A portfolio is combination of various assets and instrument of investments. A portfolio is also built up out of the wealth or income of the investors over a period of time with a view to suit his risk and return preferences to that of the portfolio that he holds.
The portfolio analysis is an analysis of the risk-return characteristics of individual securities in the portfolio and changes that may take place in combination with other securities due to interactions among themselves and impact of each one of them on others.
As individuals are becoming more and more responsible for ensuring their own financial future, portfolio or fund management has taken on an increasingly important role in banks ranges of offering their own clients. In addition to an interest rates have come down and the stock market has gone up and come down again, clients have a choice of living their saving n deposit accounts, or putting those savings in unit trusts or investment portfolios each invest in equities and bonds. Investing in unit trust or mutual funds is one way for individuals and corporations alike to potentially enhance the returns on their savings
SCOPE OF STUDY:
The study covers the calculation of correlation between the different securities in order to find out at what percentage funds should be invested among the companies in the portfolio. Also the study include the calculation of individual Standard Deviation of securities and ends the calculation of weights of individual securities involved in the portfolio.
Sources of Secondary Data: a. Official publications of the Indian bodies like SEBI and AMFI. b. Official publications of the International bodies like the United Nations Organization and its subsidiary bodies. c. Reports and publications of Trade Associations, Chambers of Commerce, Banks, Cooperative Societies, Stock Exchanges and Asset Management Companies. d. Technical trade journals like Outlook, Business India, Business Today and Newspapers. e. Internet f.. keeping in View the Risk and Returns Of the investor we assume the
Implementation of study:
For implementation of the study, ten securities or stock constituting the sense market is selected, comprising of one-month opening share prices from the Times of India, dated from 11 th march to 29th march 2008. In order to know the risk of the stock or security, the formula to be used is given below: Variance = (1/n-1)(d) ^ 2 Standard Deviation () = Variance Where, (d) ^ 2 = Squares of Deviations taken from actual mean. n = No. of Observations After that it is required to compare the stock or securities of two companies with each other by using the below formula of correlation co-efficient as follows. Co-Variance (Cove AB) = (1/n)(dx * dy) Where, (dx*dy) = Summation of the product of Deviation between two companies. n = Number of observations
Correlation Coefficient(r) = Where, Cove AB = Co-Variance between A&B (A) * (B) = Product of Standard Deviation between A&B
The next step is the formation of the optimal portfolio on the basis of what percentage of should be invested when two securities and stock is combined i.e. calculation of portfolio weight by using minimum variance equation as follows.
(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)
Where, Ax = Proportion of security A Be = Proportion of security B a = Standard Deviation of Security A b = Standard Deviation of Security B rib = correlation Co-efficient between A&B The final step is to calculate the portfolio risk, combined risk, that shows how much the risk is reduced by combing two securities or sock by using the given below formula. p = Where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment is Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a&b
CHAPTER-II REVIEWOFLITERATURE
Secondary Objectives:
The following are the other ancillary objectives: Regular Return Stable Income Appreciation Of Capital More Liquidity Safety Of Investment Tax Benefits
Portfolio Management services helps investors to make a wise choice between alternative investment with pit any post trading hassles this service renders optimum returns to the investors by proper selection of continuous change of one plan to another plan with in the same scheme, any portfolio management must specify the objectives like maximum returns, and risk capital appreciation, safety etc in their offer. (a). (b). (c). (d). Debentures partly convertible and non-convertible debentures debt with tradable warrants. Preferences shares Government securities and bonds Other debt instruments.
evaluation of portfolio is to be one in terms of targets set for risk and returns, the changes in the portfolio are to be effected to meet the changing condition. Portfolio construction refers to the allocation of surplus funds in hand among a variety of financial assets open for investment. Portfolio theory concerns itself with the principles governing such allocation. The modern view of investment is oriented more go towards the assembly of proper combination of individual securities to form investment portfolio. A combination of securities held together will give a beneficial result if they grouped in a manner to secure higher returns after taking into consideration the risk elements.The modern theory is the view that by different regions. In different industries or those producing different types of product lines. Modern theory believes in the perspective of combination of securities under constraints of risk and returns.
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3.SELECTION OF SECURITIES:
Generally, investors pursue an active stance with respect to security selection. For stock selection, investors commonly go by fundamental analysis and technical analysis. The factors that are considered in selection bonds are yield to maturity, credit rating, term to maturity, tax shelter and liquidity.
4. PORTFOLIO EXECUTION:
This is the phase of portfolio management which is concerned with implementing the portfolio plan by buying and selling specified securities in given amounts. Though often glossed over in portfolio management discussions, this is an important practical step that has a bearing on investment results.
5. PORTFOLIO REVISION:
The value of a portfolio as well as its composition the relative proportions of stock & bond components-may change as stocks & bonds fluctuate. Of course, the fluctuation in stock is often the dominant factor underlying this change. In response to such changes, periodic rebalancing of the
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portfolio is required. This primarily involves a shift from stocks to bonds or vice-versa. In addition, it may call for sector rotation as well as security switches.
6. PERFORMANCE EVALLUATION:
The performance of a portfolio should be evaluated periodically. The key dimensions of portfolio performance evaluation are risk & return and the key issue is whether the portfolio return is commensurate with its risk exposure. Such a review may provide useful feedback to improve the quality of the portfolio management process on a counting basis.
creating false markets, etc. Their books of accounts are subject to inspection and audit by SEBI. The observance of the code of conduct and guidelines given by the SEBI are subject to inspection and penalties for violation are imposed. The manager has to submit periodical returns and documents as may be required by the SEBI from time to time.
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Clients funds should be kept in a separate bank account opened in scheduled commercial bank. Purchase or sale of securities shall be made at prevailing market price.
a) Advisory role:
Advice new investments, review the existing ones, identification of objectives, recommending high yielding securities etc.
c)Financial Analysis:
He should evaluate the financial statement of the companys in order to understand their network, future earning prospects & strengths.
e)Study of Industry:
To know hid future prospects, technological changes etc. He should also foresee the problems of the industry.
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Keeping in mind, the objective of portfolio, a portfolio manager has to decide whether the portfolio should comprise equity, preferences shares, debentures-convertible, non-convertible partly convertible, money market securities etc., are a mix of more than one type. A proper mix ensures higher safety, yield & liquidity coupled with balanced risk.
NATURE:
An individual investor postpones current consumption only in response to a rate of return which must be suitably adjusted for inflation and risk. This basic postulate, in fact, unfolds the nature of investment decision.Cash has an opportunity cost and when you decide to invest it you are deprived of this opportunity to earn a return on that cash. Also, when the general price level raises the purchasing power of cash. This explains the reason why individuals require a real rate of return on their investments. The basis investment decision would be a trade-off between risk and return.
OBJECTIVES:
1. The first basic objectives of investment is the return on it or yields. The yields are higher, the higher is he risk taken by investors. The risk less return is the bank deposit rate. Here the risk is least as funds are safe and returns are certain.
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2. Secondly, each investor has his own asset preferences and choice of investments. Thus, some risk adverse operators put their funds in bank or post office deposits of deposits or certificates with co-operatives and Pusss. Some invest in real estate, land and building while others etc., 3. Thirdly, every investor aims at providing for minimum comforts of house furniture, vehicles, consumer durables and other household requirements. After satisfying these minimum needs, he plans for his income, savings in insurance pension and provident is subordinated to the needs of the investor. 4. Lastly, after satisfying all the needs and requirements, the rest of the savings would be invested in financial assets, which will give him future income and capital appreciation so as to improve his future standard of living. These may be in stock or capital market investment.
Avail of tax shelters. Adopt a suitable formula plan. Select fixed income instruments judiciously. Focus on fundamentals, but keep an eye on technical. Diversify moderately.
PORTFOLIO RISK:
Risk refers to possibility that the actual outcome of an investment will differ form its expected outcome. More specifically, most investors are concerned about the actual outcome being less than expected outcome. The wider the range of possible outcomes, the greater the risk. But proper management of risk involves the right choice of the investments whose risks are compensating. There are three types of risks, they are 1. Business risk or Unsystematic risk 2. Interest rate risk
3. Market risk or Systematic risk.
The Unsystematic risks are mismanagement, increasing inventory, wrong financial policy, defective marketing etc., Just as the risk of an individual security is measured by the variance or standard deviation of its return, the risk of a portfolio too is measured by the variance or standard deviation of its return. Although, the expected return on a portfolio is the weighted average of the expected returns on the individual securities in the portfolio, portfolio risk is not the weighted average of the risk of the individual securities in the portfolio (expect when the returns from the securities are uncorrelated).
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To develop the equation for calculating portfolio risk we need information on weighted individual security risks 7 weighted co movements between the returns of securities included by covariance and coefficient of correlation.
COVARIANCE:
Covariance reflects the degree to which the returns of the two securities vary or change together. A positive covariance means that the returns of the two securities move in the same direction where as a negative covariance implies that the returns of the two securities move in opposite direction. The covariance between any two securities x & y is calculated as follows: 26 Cove y = Where, Cove y = Covariance of x & y Rx = Return of Security x Rye = Return of Security y E(Rx) = Expected Return on Security x E(Rye) = Expected Return on Security y Pi = Probabilities associated with states 1..n
COEFFICIENT OF CORRELATION:
Covariance & Correlation are conceptually analogous in the sense that both of them reflect the degree of co moments between two variables. Mathematically, they are related as follows:
Cor y =
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Cor y = Coefficient of correlation of x & y Cor y = covariance of x & y x & y = Standard deviation of x & y.
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VISION
To be the most respected company in the financial services space. To be the premier provider of investment advisory and financial planning services in India.
Approach to research
The Company follow a simple approach to research as follows Data collection Analysis Communication Feedback All the analysts of the firm have significant experience, which they share with each other. They believe that they have an innovative sources of data, that helps to keep ahead to identify trends. It would be unfair on our part not to mention the immense contribution which our clients and readers feed back forms to the QC as well as R&D for us. The feedback helps us in all stages- data collection and communication, most importantly, in improving our methodology as well.
STRENGTHS
The following are the strengths that set the firm apart.
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The firm has been in information services for the last seven years and has assiduously built the necessary for the business. We have leveraged our content to create the India Infoline brand, which is synonymous with credible information on business and finance. The firms top management team represents a skill set, which is mutually exclusive but collectively exhaustive. The strength of the organization has been to continuously innovate and reinvent itse
CHAIRMAN
EXECUTIVE DIRECTOR
BOARD OF DIRECTORS
NonExecutive Director
Independent Director
Independent Director
Independent Director
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Mr.R Venkataraman
Is the co-promoter and Executive Director of India Infoline Ltd. He holds a B.Tech Electronics and Electrical Communications Engineer from IIT Kharagpur and an MBA degree also.
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INVESTORS RELATIONS:-
The India Infoline group, comprising the holding company, India infoline ltd and its wholly owned subsidiaries entire gamut of investment products ranging from Equities and derivatives trading, Commodities trading, Management Services, Mutual Funds, Life Insurance, Fixed Deposits, Gol bonds and other small savings. India Infoline also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.
India Infoline Ltd company listed on both the leading stock exchanges in India namely the Stock Exchange, Mumbai(BSE) and National Stock Exchange (NSE). India Infoline is a forerunner in the field of equity research. India Infoline acknowledged by none other than forbes as Best of the Web and a must read for investors in Asia. India Infolines research is available not just over the internet but also on international wire services Ltd. (code:IILL), Thomson First Call and Internet Securities where it is amongst the most read Indian broking companies. India Infoline group has a significant presence across the country owing to its 125 offices across 45 cities in India. These offices are networked and are connected with the corporate office in Mumbai. The group has initiated significantly in technology and research, the results of which are there for everyone to see. The 5paisa.com is one the most advanced platforms available to retail investor in India.The group has memberships on BSE and NSE for equities trading and on MCX and NCDEX for commodities and has a SEBI license for portfolio Management under which, various schemes are offered which have been beating the benchmark indices since inception. India Infoline is the one-stop shop for all investments in India.
India Infoline securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the businesses of Equities broking and portfolio Management Services. It holds memberships of both the leading stock exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE.
India Infoline Insurance Services Ltd:-India Infoline insurance services Ltd is also a 100%
subsidiary of India Infoline Ltd and is a registered corporate agent with the insurance regulatory and development authority (IRDA). It is the largest corporate agent for ICICI Prudential Life Insurance Company Ltd, which is Indias largest Pvt Life Insurance Company.
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India Infoline Investment Services Ltd:-India Infoline Services Ltd is also a 100%
subsidiary of India Infoline Ltd. It has a NBFC license from RBI and offers margin-funding facility to the broking customers.
5paisa.com
5paisa is the trade name of India Infoline Securites Private Limited (5paisa), member of National Stock Exchange and The Stock exchange, Mumbai. 5paisa is a wholly owned subsidiary of India portal. 5paisa has emrged as one of leading players in e-broking space in India. Our key product offerings are as follows:
Students and researchers who need live streaming quotes and intra day charts.
Trader terminal (TT):-Trader Terminal is for the dedicated day traders, who churn their
portfolio on minor movements in the market, sometimes seferal times a day. Their rapid and high volume trading requires a powerful interface for lightning fast order execution. They moitor marked to market positions on a minute-to-minute basis, with facilities for panic exit. They need all the analysis fundamental and technical, market gossip, price and volume information and much more all at one click.
High net worth individuals with large and active equities portfolio who need to monitor and action swiftly.
Large corporate or trust who have dedicated staff to monitor, analyze and shuffle their portfolios. Features of Trader Terminal
Trade execution in a fraction of a second! Live streaming quotes. Price watch on any number of scrips.
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Intra day charts, updated live, tick-by-tick. Live margin, position, marked to market profit & Loss report. The lowest Brokerage on the face of the earth! Set any number of price alerts on any no of scrips Flexibility to customize screen layout and setting Facility to customize any no of portfolios and watch lists Facility to cancel all pending orders in one click. Top gainers, top losers, most active, updated live Index information : Index chart, Index stock Information value
Market depth i.e. best 5 bids and offers, updated live for all scrips Instant trade confirmation Online access to both accounts and DP Live updated order and trade book Details of pending, executed and rejected orders Online access to customer services 128-bid super safe encryption Facility to place orders on the phone in all major cities Facility to place after market orders Online fund transfer facility from leading banks. Online intra-day technical calls
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Exhaustive data base of over 5000 companies Historical charts and technical analysis tools. India Infolines world- acclaimed news service and research Lots more.last but not the least ideas that help people make money.
INDUSTRY PROFILE
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Management Consulting Services . . . Founded in 1985, Madras Consultancy Group (McG) is a management consulting firm with a special focus on : (http://www.consultmcg.com) Market Entry Strategy Market Research & Industry Studies Indian Regulatory Environment Marketing Consultancy Feasibility Studies Training McG has successfully completed over 300 assignments in diverse fields such as steel, aluminium, plastics, chemicals, automobile, engineering & electronic components, telecom services, packaging, material handling, building products, industrial machinery and equipment. Customer Satisfaction studies have been undertaken for large manufacturing and distribution firms in India. McG has undertaken market research studies in South East Asia and South Asia. Understanding the Indian Regulatory Environment is made simple with McGs analysis and interpretation. Consulting services are provided for setting up operations in India. Over the decade, McG has meticulously developed and updated a database on the Indian economy, industry and the markets. McG has a team of well qualified and experienced advisers, consultants and researchers. Several large Indian corporates as well as many International firms have availed of McGs consulting services and continue to do so.
Madras Consultancy Group 3-B, K.G. Vallencia 57, 1st Main Road, Gandhi Nagar Adyar, Chennai 600020 INDIA.
Website www.consultmcg.com Tel No. 91 (44) 4211 3434 / 4211 3492 Fax No.91 (44) 4211 3490
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X-x=d Deviation
d^2 Squared
10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
Price(Rest) 615.50 618.45 612.00 610.70 600.05 610.10 627.10 627.05 648.10 678.10 6247.60
Dev 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76 624.76
-9.26 -6.31 -12.76 -14.06 -24.71 -14.66 2.34 2.29 23.34 53.79
85.74 39.81 162.81 197.68 610.58 214.91 5.47 5.24 544.75 2893.36 4760.35
= 624.76
Variance
= (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2893.36 in 2103-2010 and the loss is 5.24 get date is 19-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total
= 2085.7
Variance
= (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 4442.22 in 1303-2010 and the loss is 56.25 get date is 14-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total
= 679.46 ^ 2)
Variance = (1/n-1)(
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2380.46 in 2103-2010 and the loss is 1.12 get date is 10-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
= 435.09
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1409.25 in 1103-2010 and the loss is 0.29 get date is 14-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total
= 233.13
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 103.63 in 1403-2010 and the loss is 0.6 can get date is 10-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 Total
= 449.53
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 516.14 in 2103-2010 and the loss is 6.86 get date is 12-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
= 1254.49
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2445.30 in1803-2010 and the loss is 45.69 get date is 21-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
= 2944.88
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 16879.20 in 21-03-2010 and the loss is 42.51 get date is20-03-2010.
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CALCULATION OF STANDARD DEVIATION OF WIPRO X Share Price(Rest) 564.60 573.00 581.90 555.25 561.15 565.90 595.15 600.90 600.90 586.15 5784.9 x Average(Rest) Dev 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 578.49 X-x=d Deviation -12.05 -3.65 5.25 -21.4 -15.5 -10.75 18.5 24.25 24.25 9.5 d^2 Squared 154.20 13.32 27.56 457.96 240.25 115.56 342.25 588.06 588.06 90.25 2617.47
Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
= 578.49
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 588.06 in 1903-2010&20-03-2010 and the loss is 13.32 get date is 11-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010 TOTAL
= 327.13
Variance = (1/n-1)(
^ 2)
INTERPRETATION:
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According to the above table the analasys should be on the basis of standard deviation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 613.55 in 2103-2010 and the loss is 9.18 get date is 18-03-2010.
Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010
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INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 2660.73 in 20-03-2010 and the loss is -1543.77 get date is 21-03-2010.
INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1207.88 in 21-03-2010 and the loss is -17.16 get date is 14-03-2010.
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Date 10-03-2010 11-03-2010 12-03-2010 13-03-2010 14-03-2010 17-03-2010 18-03-2010 19-03-2010 20-03-2010 21-03-2010
Co-
= (1/10) = 317.37
INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1672.3 in 20-03-2010 and the loss is -652.06 get date is 21-03-2010.
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INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 386.69 in 18-03-2010 and the loss is -55.3 get date is 11-03-2010.
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INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 3218.11 in 21-03-2010 and the loss is38.96 get date is 10-03-2010.
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INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 1799.83 in 19-03-2010 and the loss is -615.66 get date is 17-03-2010.
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INTERPRETATION:
According to the above table the analasys should be on the basis of Correlation and in the analasys to the date 10-03-2010 to 21-03-2010 then the investor can get more profit 338.23 in 20-03-2010 and the loss is -310.9 get date is 12-03-2010.
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(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)
Where, Xa = Portfolio of AUROBINDO Xb = Portfolio of Infosys a = Standard Deviation of AUROBINDO b = Standard Deviation of Infosys rab = Correlation Co-efficient between A & B = = = (34.53)-(0.235)(22.99)(34.53) / (22.99)^2+(34.53)^2-(2)(0.265)(22.99)(34.53) 583.48 / 1300.14 0.44
Xb = 1- Xa = 0.56
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(b)^2-rab(a)(b) (a)^2+(b)^2-2rab(a)(b)
Where, Xa = Portfolio of Dr REDDYS Xb = Portfolio of NIIT a = Standard Deviation of Dr REDDYS b = Standard Deviation of NIIT rab = Correlation Co-efficient between A & B
(20.99) (22.80)
= =
Xb = 1- Xa = 1-0.57 = 0.43
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Where, Xa = Portfolio of INFOSYS Xb = Portfolio of Satyam Computers a = Standard Deviation of INFOSYS b = Standard Deviation of Satyam Computers rab = Correlation Co-efficient between A & B
= (16.26) )^2-(0.56)(16.26)(34.53) / (16.26)^ 2+(34.53)^ -(2)(0.56)(16.26) (34.53) =(50.83) / (827.57) =0.6 Xb = 1- Xa = 1-0.06 = 0.94
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Where, Xa = Portfolio of TCS Xb = Portfolio of CIPLA a = Standard Deviation of TCS b = Standard Deviation of CIPLA rab = Correlation Co-efficient between A & B
= 1- Xa = 1-0.07 = 0.93
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Where, Xa = Portfolio of DIVIS Xb = Portfolio of RANBAXY a = Standard Deviation of DIVIS b = Standard Deviation of RANBAXY rab = Correlation Co-efficient between A & B
Xb = 1- Xa = 1-0.13 = 0.87
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Where, Xa = Portfolio of DIVIS Xb = Portfolio of WIPRO a = Standard Deviation of DIVIS b = Standard Deviation of WIPRO rab = Correlation Co-efficient between A & B
Xb = 1- Xa = 1-0.068 = 0.94
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Where, Xa = Portfolio of Dr REDDYS Xb = Portfolio of TCS a = Standard Deviation of Dr REDDYS b = Standard Deviation of TCS rab = Correlation Co-efficient between A & B
= = =
Xb = 1- Xa = 1-0.74 = 0.26
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p = (0.44)^2(22.99)^2+(0.56)^2(32.53)^2+(2)(0.265)(0.44)(0.56)(22.99)(34.52)
24.08
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where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.06, X2 =-0.94, 1 = 34.53, 2 = 16.26, rab = 0.56 p =
(0.06)^2(34.52)^2+(0.94)^2(16.26)^2+(2)(0.56)(0.06)(0.94)(34.53)(16.26)
16.53
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p =
(X1)^2
where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.07, X2 = 0.93, 1 = 32.36, 2 = 5.24, rab= 0.57 p =
(0.07)^2(32.36)^2+(0.93)^2(5.24)^2+(2)(0.57)(0.07)(32.33)(0.93)(5.24)
6.43
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where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.13, X2 = 0.87, 1 = 76.46, 2 = 12.81, rab = 0.78
p =
(0.13)^2(76.46)^2+(0.87)^2(12.81)^2+(2)(0.78)(0.13)(0.87)(76.46)(12.81)
19.18
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where,
p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 = 0.06, X2 = 0.94, 1 = 76.46, 2 = 17.05, rab= 0.48
p =
(0.06)^2(76.46)^2+(0.94)^2(17.05)^2+(2)(0.48)(0.06)(0.94)(76.94)(17.05)
17.19
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Portfolio Risk is calculated with the help of the following formula: p = (X1)^2 (1)^2 + (X2)^2 (2)^2 + (2)* rab (X1)(X2)( 1)(2) where, p = Portfolio Risk X1 = Proportion of Investment is Security 1 X2 = Proportion of Investment in Security 2 1 = Standard Deviation of Security 1 2 = Standard Deviation of Security 2 rab = Correlation Co-efficient between Security a & b X1 =0.74, X2 = 0.26, 1 = 20.99, 2 = 32.36, rab = 0.19 p =
(0.74)^2 (20.99)^2+(0.26)^2(32.36)^2+(2)(0.19)(0.74)(0.26)(20.99)(32.36)
19.01
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Average
624.76 679.46 233.13 435.09 2085.70 449.53 1254.88 2944.88 576.65 327.13
Standard Deviation
22.99 20.99 5.24 22.80 34.53 16.26 32.36 76.46 17.05 12.81
INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theCipla&it will be measured by using risk analysis
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INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theCipla&it will be measured by using risk analysis
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Correlation 0.26 0.42 0.56 0.57 0.78 0.48 0.18 24.08 18.37 16.52 6.43 19.18 17.19 19.01
Portfolio Risk
CORRELATION
AUROBINDO/INFOSYS Dr REDDYS/NIIT
0.48
0.18
0.26
0.42
0.78 0.57
0.56
INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theTcs/Cipla and it will be measured by using risk analysis
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PORTFOLIO RISK
PORTFOLIO RISK
19.01 17.19
24.08
INTERPRETATION:
In the PortFolio Management the risk can be Segregated Major Share of risk to be devison with throw at the minor Share of risk to theTcs/Cipla and it will be measured by using risk analysis
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ANALYSIS:
Company Name AUROBINDO Dr.REDDY CIPLA NIIT INFOSYS SATYAM TCS DIVIS WIPRO RANBAXY
Average 624.76 679.46 233.13 435.09 2085.70 449.53 1254.88 2944.88 576.65 327.13
Standard Deviation 22.99 20.99 5.24 22.80 34.53 16.26 32.36 76.46 17.05 12.84
INTERPRETATION To Analyze Whether the selected portfolio is Cipla.It is the Satisfactory and Constant Return to the Investor.
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Whether the Combination Industries are TCS&Cipla.It is yield by the good return to the Investor
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SUGGESTIONS
Following are some of the suggestions: 1. As market is not doing well, investor should wait for sometimes, in order to get positive returns. 2. In order to enjoy more returns, he should invest in more; investor should invest in more risky securities as a risk taker.
3. If he is a risk-averse investor, then he should invest in less risky securities and enjoy normal returns.
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FINDINGS
During the study, following are some of the observations that are found out: As the market is not doing well, current prices of various stocks fallen when compared to purchase prices. Therefore, investor may incur negative returns also. 1. Since the term returns from an investment refers to the benefits that an investor receive from that particulars investment, hence we can infer that portfolio is generating more returns when compared to individual. 2. If risk parameter is taken in consideration, portfolio has low risk to that of individual risk. 3. When beta ( which reflects the movement in stocks or a portfolio return in relation to that of market return) is considered, portfolio A is less volatile then of portfolio B. From the above analysis, we conclude that portfolio A is having less risk as well as generating more returns comparing the portfolio B, if investor is not a risk taker then definitely invest in portfolio. A where he enjoy taking less risk and more returns.
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CONCLUSIONS
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CHAPTER VI BIBLIOGRAPHY
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VISITED WEBSITES:
www.nseindia.com www.investopedia.com www.bseindia.com www.economictimes.com www.bloomberg.com www.monycontrol.com
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