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The document contains daily stock price data for Apple, Amazon and Tesla over a period from February to August 2021. It includes the stock prices, daily returns and some calculations like average return, variance and correlation between the stocks. The key findings are: - Apple had the highest average daily return of 0.206%, followed by Tesla at 0.184% and Amazon at 0.191%. - Tesla had the highest variance of daily returns at 0.039%, followed by Apple at 0.013% and Amazon at 0.010%. - Apple and Tesla had the lowest correlation between daily price movements at 0.10169. - A portfolio combining Apple and Tesla stocks was

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47 views

Coursework

The document contains daily stock price data for Apple, Amazon and Tesla over a period from February to August 2021. It includes the stock prices, daily returns and some calculations like average return, variance and correlation between the stocks. The key findings are: - Apple had the highest average daily return of 0.206%, followed by Tesla at 0.184% and Amazon at 0.191%. - Tesla had the highest variance of daily returns at 0.039%, followed by Apple at 0.013% and Amazon at 0.010%. - Apple and Tesla had the lowest correlation between daily price movements at 0.10169. - A portfolio combining Apple and Tesla stocks was

Uploaded by

Khawaja Hamza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Answer 1)

Apple Amazon Tesla


Date
Price Return % Price Return % Price Return %
02/08/21 145.09 0.00% 3,331.48 0.00% 709.67 0.00%
03/08/21 146.93 1.26% 3,366.24 1.04% 709.74 0.01%
04/08/21 146.52 -0.28% 3,354.72 -0.34% 710.92 0.17%
05/08/21 146.63 0.07% 3,375.99 0.63% 714.63 0.52%
06/08/21 145.93 -0.48% 3,344.94 -0.92% 699.10 -2.17%
09/08/21 145.88 -0.03% 3,341.87 -0.09% 713.76 2.10%
10/08/21 145.39 -0.34% 3,320.68 -0.63% 709.99 -0.53%
11/08/21 145.65 0.18% 3,292.11 -0.86% 707.82 -0.31%
12/08/21 148.67 2.08% 3,303.50 0.35% 722.25 2.04%
13/08/21 148.88 0.14% 3,293.97 -0.29% 717.17 -0.70%
16/08/21 150.90 1.35% 3,298.99 0.15% 686.17 -4.32%
17/08/21 149.97 -0.62% 3,241.96 -1.73% 665.71 -2.98%
18/08/21 146.15 -2.55% 3,201.22 -1.26% 688.99 3.50%
19/08/21 146.49 0.23% 3,187.75 -0.42% 673.47 -2.25%
20/08/21 147.97 1.02% 3,199.95 0.38% 680.26 1.01%
23/08/21 149.49 1.03% 3,265.87 2.06% 706.30 3.83%
24/08/21 149.40 -0.06% 3,305.78 1.22% 708.49 0.31%
25/08/21 148.14 -0.84% 3,299.18 -0.20% 711.20 0.38%
26/08/21 147.32 -0.55% 3,316.00 0.51% 701.16 -1.41%
27/08/21 148.38 0.72% 3,349.63 1.01% 711.92 1.53%
30/08/21 152.90 3.04% 3,421.57 2.15% 730.91 2.67%
31/08/21 151.61 -0.84% 3,470.79 1.44% 735.72 0.66%

Answer 2)

Formula used for calculating average return in excel and variance in excel is as follows:

Apple Amazon Tesla

Average Return 0.206% 0.191% 0.184%

Variance 0.013% 0.010% 0.039%

Answer 3)
Variance-covariance Matrix

Apple Amazon Tesla


Apple 0.01324% 0.00691% 0.00237%
Amazon 0.00691% 0.01032% 0.00950%
Tesla 0.00237% 0.00950% 0.04114%

Correlation Matrix

Apple Amazon Tesla


Apple 1.00000
Amazon 0.59136 1.00000
Tesla 0.10169 0.46137 1.00000

Answer 4)

Two companies from question 3 are Apple and Tesla i.e. 0.10 with lowest correlation, therefore,

the portfolio analysis is as follow:

Portfolios Weightage Apple Weightage Tesla Expected Return Standard Deviation


1 1 0 0.21% 1.12%
2 0.75 0.25 0.20% 1.02%
3 0.5 0.5 0.19% 1.19%
4 0.25 0.75 0.19% 1.54%
5 0 1 0.18% 1.98%
Answer 5)

Markowitz Efficient Frontier (MEF)


2.50%

2.00%

1.50%

1.00%

0.50%

0.00%
0.18% 0.19% 0.20% 0.21%

Answer 6)

The correlation between all three stocks are positive. It means that the change in the adjusted

closing price of one stock will result in the change on the adjusted closing price of the other

stock and have linear relationship. For the purpose of diversification the investment in the stock

of Apple and Tesla is considered to be a good combination for investment portfolio as the

correlation between these two stocks in minimum.

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