Diversification and Systematic Risk in Crown Resorts Ltd

ECF1120 Semester 1 2019
Assignment Instructions
2019

Crown Resorts Ltd
Executive Summary
Diversification is the need of the hour because the market is exposed to various risks and
uncertainties. It is one of the vital aspects when it comes to long term planning and return
generation. The current report is based on the concept of diversification and deal with the
ASX listed company called Crown Resorts Ltd. The reports provide a strong emphasis on
diversification together with systematic and unsystematic risk. Further, the global factors that
affect the share prices is even discussed. The report differentiates the company’s return in
comparison to the market return. Overall, the project defines the system of diversification and
how it helps the investor to beat the risks of market.
2

Crown Resorts Ltd
Contents
Introduction...........................................................................................................................................4
Key events and driving factors affecting global financial markets........................................................4
Share price trends of the market index and company...........................................................................5
Performance of Market and Crown Resorts in terms of risk and return...............................................8
Diversification, systematic and unsystematic risks................................................................................9
Company’s operations, developments, and/or initiatives from 2014 - 2018.......................................11
Systematic and unsystematic risk........................................................................................................13
Key events and driving factors of global financial markets from 2014 - 2018.....................................14
Recommendation................................................................................................................................15
Conclusion...........................................................................................................................................16
References...........................................................................................................................................17
3

Crown Resorts Ltd
Introduction
The Crown Resorts Ltd has been a major mover in terms of share price and the segment has
done a commendable business in Australia. However, the market cannot operate in isolation,
it is influenced by the conditions in the economy as a whole. There are various international
and other domestic factors that influences the operations of the company. The same has been
highlighted and discussed in the report. Further, systematic and unsystematic risk has been
discussed that have a major role to play in the company’s functioning. The continuous
movement of the share price in this domain projects that the company has been doing
reasonably well.
Key events and driving factors affecting global financial markets.
The government exercises a lot of control over the free markets. All the policies that are
being propounded by the government in relation to the monetary terms play a very vital role
in the financial sector of the country. By increasing or decreasing the interest rates, the
government can regulate the speed and growth of the country. The increase in government
activities also leads to remove unemployment and stabilize prices of goods all over the
country. Inconsistent interest rates in the market also lead the international market to be much
more stimulated because of the regular investment inflows and outflows of the country.
International Stocks
It is generally noticed that international stocks are affected because of the general economic
conditions of the country. These stocks are also related to the economy of various other
countries. The US economy is the largest in the world and is one of the most important
financial pillars because of which any kind of economic struggle in the US will affect the
whole world's economy.
Emerging markets
Decoupling has become very popular in the present situation. This is a general economic term
that is used to describe a market which is gradually getting unlinked to another market
(Lapsley, 2012). The huge economies of the world like the United States are highly volatile
4