Portfolio Management Assignment : Tesco

Added on - 21 Apr 2021

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RUNNING HEAD: Portfolio management1Name of the studentTopic-Portfolio investmentUniversity name
Portfolio management2In this report, six companies have been selected to prepare the portfolio. There are sixcompanies named such asRisk free return companyVanguard Australian Government Bond ETF (VGB.AX)SPDR S&P/ASX Australian Govt Bd ETF (80084.AX)Russell Inv Australian Government Bd ETF (80068.AX)Risky AssetsBHP BillitonWesfarmersTescoAfter evaluating the excel file attached in this report, it is observed that Wesfarmers and BHPBilliton is less risky company and more weighted is given to these companies to invest moremoney.The minimum variance portfolio of these three companies are given as belowMinimum Variance PortfolioWeighted59%26%15%YearBHPWesfarmersTesco1-0.14950.01345820.159872-0.0469-0.013732-0.05923-0.01720.0051107-0.0323There are below given data for these three companiesParticularBHPWes farmerTescoAverage rateof return0.00410.00570.0001StandardDeviation0.096410.050800.06676Correlation ofcoefficient0.2104310580.0045947370.121230764It shows that Wesfarmers has higher average return as compared to other riskycompanies. On the other hand, the standard deviation of the BHP is also very high. Thecorrelation of coefficient is also high in case of Wesfarmers and Tesco.
Portfolio management3There are below given weighted to each four stocks which reflect that risky assets weightageis high with a view to earn more return.Optimum risk portfolioWeight 10.178Weight 20.292Weight 30.239Risk free assets0.291Exp ret0.086Std dev0.154Sharpe ratio0.236Computation of the Beta for all these three risky companiesThe beta of the company reflects the changes in the share price of company on the basis ofmarket premium. All these companies have different Beta which reflects the changes in shareprice based on the market factors.Computation of the beta of BHP BillitonSUMMARY OUTPUTRegressionStatisticsMultiple R0.022597R Square0.000511Adjusted RSquare-0.02978Standard Error0.032028Observations35ANOVAdfSSMSFSignificanceFRegression11.73E-051.73E-050.0168590.897481Residual330.0338510.001026Total340.033868CoefficientsStandardErrort StatP-valueLower95%Upper95%Lower95.0%Upper95.0%Intercep0.001550.0054320.2850.776-0.01260-0.01260
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