Investment Analysis and Portfolio Management

This presentation provides an analysis of investment and portfolio management, focusing on the risk and return of stocks, correlation matrix, and portfolio construction. It concludes with recommendations for portfolio selection and the importance of active management. References to ABB Group, Alphabet Inc., and Next-Era Energy are included.

Investment Analysis
and Portfolio
Management

Company Analysis
 The stocks selected for the purpose of analysis and portfolio construction were Next-Era
Energy (NEE), ABB Group (ABB) and Alphabet (GOOG).
 Next-Era Energy (NEE): The Next-Era Energy Company operates as an Electric Service
Company having its operations on a world-wide basis through-out the United States and
Canada. The company was founded in the year 1925 and the key product that the
company aims to deliver is generation of electricity.
 ABB Group (ABB): ASEA Brown Boveri is an Swedish Multinational Corporation that is
headquarter in Zurich Switzerland, having its operations in the robotics, power, heavy
electronic equipment’s, and in Automated Technology Areas.
 Alphabet Inc. (GOOG): Alphabet Inc. a multinational American Conglomerate Company
that is headquartered in the Mountain View, California. In terms of size, the company on a
net has a total asset capacity of US$232.8 Billion in the year 2018. An all total of 103,549
Employees are directly associated with the company

Risk and Return of Stocks
 The stocks that were primarily selected for the purpose of analysis will be considered based
on the risk and return profile of each of the stocks for the time stated period of one year.
 Next-Era Energy (NEE): The return for the NEE stock in the trend period was around
14.52% and the associated risk with the stock was around 16.95%. On a risk return basis the
stock has given around 0.86 times of return for a single unit of risk taken.
 ABB Group (ABB): The return generated by the ABB Group for the trend period was around -
21.15% and the associated risk, which is the standard deviation for the stock was around
24.89% for the stock. On a risk return ratio the stock has generated around -0.85 of return for
a single unit of risk taken by the investors.
 Alphabet Inc. (GOOG): The annual return generated by the Alphabet Company has been
around 9.17% and the associated risk that was associated with the company was around
24.78% for the company in the stated point of time. On a risk to return ratio the company on
a net has generated 0.37 times of return for a single unit of risk taken.

Correlation Matrix
 The correlation between all the variables that were returns from Next-Era Energy (NEE), ABB
Group (ABB) and Alphabet (GOOG) were taken into consideration to assess the degree of
relation between the two set of numbers.
 The correlation between the Next-Era and ABB Group was found to be 0.09 reflecting that the
same may not be perfectly correlated but is signalling a positive correlation to a very low
extent. On the other hand, the correlation between the ABB Stock and Alphabet Inc. Stock was
around 0.74 reflecting a positive correlation between the variables. While the correlation
between the Alphabet Inc. and Next-Era stock has been negative giving an all-round
correlation of -0.13 for the combined stock basis.
Correlation Matrix
Particulars Next-Era ABB Group Alphabet Inc.
Next-Era 1.00 0.09 -0.13
ABB 0.09 1.00 0.74
Alphabet Inc. -0.13 0.74 1.00

Summary
 Analysis of the stocks based on a risk return basis helped us in the construction of portfolio
and understand the various aspect of the return both from an individual and as well as from
a portfolio approach.
 The analysis of the stocks concluded that the NEE stock has provided the highest set of
return to the investors and from a portfolio perspective the Portfolio 2 was considered to be
as one of the best option available for the investor for the purpose of investment.
 It is crucial to note that the weights selected for the purpose of analysis has been around
50% for each of the stock in the portfolio if a slight changes or modification could be done
based on the expectation and assumptions that an investor makes in the perspective of the
stock will be benefiting the investor in generating active return with the help of active
management for the investors.

References
 ABB Ltd. - Stock Snapshot - Value Research Online.
(2019). Valueresearchonline.com. Retrieved 12 September 2019, from
https://www.valueresearchonline.com/stocks/snapshot.asp?code=292
 Alphabet Inc. Cl C. (2019). MarketWatch. Retrieved 12 September 2019,
from https://www.marketwatch.com/investing/stock/goog
 Chandra, P. (2017). Investment analysis and portfolio management.
McGraw-Hill Education.
 GmbH, f. (2019). GOOG Stock | ALPHABET C (EX GOOGLE Stock Price
Today | Markets Insider. markets.businessinsider.com. Retrieved 12
September 2019, from https://markets.businessinsider.com/stocks/goog-
stock

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