Methods to Do Research in Stocks and Evaluation of the Portfolio from the Financial Analysis Dimension - Statistics Project Example

The paper “Methods to Do Research in Stocks and Evaluation of the Portfolio from the Financial Analysis Dimension" is an informative example of a statistics project on finance & accounting. Portfolio analysis is important in investments since it enables the investor to analyze risk and returns involved in any investment that they wish to undertake. Portfolio analysis is a systematic way to analyze the investment options that make up an association's business portfolio. In this report, we seek to dig deeper and analyze the stocks we identified in the previous assignment so as to make our recommendations known. The objective of the study is to be able to come up with investments that not only guarantee above-average returns but are also in agreement with the risk attitude of the investor as argued in Andreev, Kanto, and Malo (2007). 

Our study will focus on the below portfolio structure consisting of the six stocks: Analysis of Results: Basing our analysis on each stock in AXKO, one is able to note that the existing securities have played a major role in the provision of the investment income (Kamdem, 2003). The six assets used in our calculation were able to deliver a growth rate which was more than 5 and give a minimum range of risk of 0.45. In analyzing the overall performance of each stock TLS proved to have performed best by contributing the highest returns followed by WOW, then ANZ, BOQ, QAN and finally DJs. All the other stocks except TLS made low returns and also a lower risk was involved. For one to be able to have excess returns, the amount of each weight assigned to each stock has to be increased.

This model postulates that a given stock’s excess return is mainly dependent upon three factors which are as follows (Faff, 2004): Excess Market Return (EMR) Small Company Returns minus Big Company Returns (SMB) High Market-to-Book Company Returns minus Low Market-to-Book Company Returns (HML) Due to this some of the factors representing risk seekers and indicating neutral risk are relatively alike; this is quite evident on TLS which is the only stock that comes out as the best company in the optimizing portfolio. Under the circumstances at hand, the sum of all returns that are in excess and the controllable risk is also minimal (Estrada, 2011).

The correlation matrix below shows clearly the price movement of the respective shares that are a relation to the AXKO market movement. In the portfolio, ANZ has got the highest position correlation 26.48 while DJs three-Factorowest correlation of 7.52. Conclusion: From the above analysis, one may come into terms that there are several methods to do research in stocks and evaluation of the portfolio from the financial analysis dimension. Telstra Corporation Limited at the overall level is found to be independent as assessed under this model. We can make safe predictions for this stock draw following conclusions about each of the stocks in our portfolio. It can also be noted that different returns and risk levels from all the companies lead to a varied level of portfolio performance. It is, therefore, necessary that the movement of various companies be monitored. Read More