This report presents an in-depth analysis of an investment portfolio constructed with three Australian Stock Exchange (ASX) listed companies: Commonwealth Bank (CBA), Woolworths (WOW), and Sydney Airport (SYD). The analysis covers the period from December 31, 2009, to December 31, 2019. The report examines each stock individually and as a portfolio, employing descriptive statistics to assess returns, risks, covariance, and correlation. An initial investment of $900,000 was allocated equally across the three stocks. The impact of dividends, reinvested into the stocks, is also considered. The research methodology includes analyzing monthly and annual stock data to determine returns and risk. An investment policy statement is developed to guide investment decisions, considering factors like risk tolerance, liquidity, and time horizon. The report details the selection criteria for the stocks, focusing on their historical performance and market position. The analysis includes arithmetic and geometric returns, standard deviation, and coefficient of variation, along with correlation and covariance matrices. The report also discusses the investment analysis, including stock analysis, dividend and share price analysis, and concludes with recommendations based on the findings. The report emphasizes the importance of diversification in mitigating portfolio risk and maximizing potential returns within a specified time frame.
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