Assignment on Investment Analysis and Portfolio Management

Running head: INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Investment Analysis and Portfolio Management
Name of the Student:
Name of the University:
Author Note

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INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Table of Contents
Introduction 2
Discussion 2
Annual mean return 2
Standard Deviation 3
Correlation 3
Portfolio Standard deviation 3
Expected return 4
Optimal Risky Portfolio 4
Minimum Variance Portfolio 5
Expected Return on Optimal Risky Portfolio 5
The standard deviation on Optimal Risky portfolio 6
Expected Return on Minimum Variance Portfolio 6
Standard Deviation on minimum variance portfolio 7
Effective Frontier Curve 7
Conclusion 7
Reference 9

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INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Introduction
This study will analyze two stocks that are the Singapore Airlines stock and the
Wilmar International stock. It will analyze the calculation of the annualized return of the two
stocks. The risk taken by the investor when investing in the two stocks will also be analyzed
with the help of the standard deviation of the two stocks. The correlation between the two
stocks will also be analyzed. Different proportions of the two stocks will be taken to examine
the amount of risk and return associated with them. This will help to find the best
composition of the portfolio. The optimal risky portfolio composition of the two stocks will
also be analyzed. The risk associated and the expected return from the optimal risky portfolio
will be calculated. Also, the minimum variance composition portfolio of the two stocks will
be calculated.
Discussion
Annual mean return
The annual return for both the stocks have been calculated on a monthly basis in
which various aspects of the stocks have been analyzed. The average monthly return has been
determined for each of the stocks in order to well view the same from the portfolio
perspective. Here the annualized mean returns of Singapore airlines stock and Wilmar
International have been compared. The annualized mean return of Singapore airlines stock
shows a negative value of (0.03983) while the annualized mean return of Wilmar
International show a positive value of 0.069623 this means that Wilmar International has
given positive returns to the investors who invested in its stocks for the period of five years
(Hopp and Greene 2018). While the Singapore Airlines stock has incurred loss to its investors
over a period of five years.

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INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT
Standard Deviation
In order to well evaluate the stocks from the perspective of risk involved we would be
calculating the standard deviation that is associated with the stocks. The same would be well
helping us in determining the volatility that is associated with each of the stocks analyzed.
For Singapore Airlines the standard deviation of the return from its stock is 0.1420736 which
means that the returns from its stocks have not met the expected return. Also, for Wilmar
International, the standard deviation is 0.21155. The standard deviation associated with the
Wilmar Stock has been comparatively higher than the Singapore Airline Stock.
Correlation
Here the correlation between the returns from stocks of Singapore Airlines and the
returns from the stocks of Wilmar International is 0.22334. Correlation shows the level of
degree of relationship between the two set of variables. In this case it is important to note that
level of correlation has been comparatively less which is good when considered from a
portfolio perspective. It is important to note that a lower level of correlation between the
stocks analyzed and considered would be further help the investors build a better portfolio
which would not only modify the return, but also reduce the risk attached with the portfolio.
Comparison between the risk, return, and correlation
The risk and return between the two stocks can be well analyzed based on the returns
and risk that is associated with the bond. It is important to note that the Wilmar Stock on a
comparative basis had a lower set of returns, however from a portfolio optimization process
the same can also be used whereby we can well short sell the stock in order to generate
positive return for the stock.