Comparative Study of Risk and Returns of Bse-200 Stocks
Comparative study of risk and returns of BSE-200 stocks
Kapil Malhotra
10FN051
Objective of the Analysis:
The objective of my study is to understand the need to analyse the movement of the market and fulfilling them so as to achieve my goal of becoming better investor/ trader. Profit and loss are the two inseparable features of the stock market. But losses can be minimized and profits can be increased with the help of Technicals.
I have done the analysis on the basis of the daily closing prices of the 50 Stocks of BSE-200 as a reference.
For the purpose of analysis, I have used various parameters such as mean of the stocks, Standard Deviation, Beta and Cost of Equity.
Synopsis:
Here, the daily trend is judged from the closing index of the day. Here we don't have to see the intraday trend or the weekly trend. Whenever the trend changes, take the Index future (or short as the case may be) and take at least 7 trades of it continuously. Index mentioned here refers to the BSE-200 index. The Trend refers to the daily trend of the stock and not intraday but one may trade intraday based on it. There are two ways of using the information attached. If you are a slightly longer term investor, you may go on holding the stock in long if trend is up or you may go on holding the stock in short position if trend is down. If you are a short term trader you may use the information and play for small moves.
Methodology: 1. Computed the daily market return (BSE 200) from August 11, 2010 to October 20, 20101 taking preceding daily return as the base. 2. Calculated the average market return during the period and the standard deviation for the same. 3. Calculated the covariance between the market and respective companies return and the Beta values for the respective companies using:
Betaj=cov(rj,,rm )/Var(rm )
Where,
rj measures the rate of return of the company ‘j’, rm measures the rate of return of the market (BSE200), and cov(rj,rm) is the
Kapil Malhotra
10FN051
Objective of the Analysis:
The objective of my study is to understand the need to analyse the movement of the market and fulfilling them so as to achieve my goal of becoming better investor/ trader. Profit and loss are the two inseparable features of the stock market. But losses can be minimized and profits can be increased with the help of Technicals.
I have done the analysis on the basis of the daily closing prices of the 50 Stocks of BSE-200 as a reference.
For the purpose of analysis, I have used various parameters such as mean of the stocks, Standard Deviation, Beta and Cost of Equity.
Synopsis:
Here, the daily trend is judged from the closing index of the day. Here we don't have to see the intraday trend or the weekly trend. Whenever the trend changes, take the Index future (or short as the case may be) and take at least 7 trades of it continuously. Index mentioned here refers to the BSE-200 index. The Trend refers to the daily trend of the stock and not intraday but one may trade intraday based on it. There are two ways of using the information attached. If you are a slightly longer term investor, you may go on holding the stock in long if trend is up or you may go on holding the stock in short position if trend is down. If you are a short term trader you may use the information and play for small moves.
Methodology: 1. Computed the daily market return (BSE 200) from August 11, 2010 to October 20, 20101 taking preceding daily return as the base. 2. Calculated the average market return during the period and the standard deviation for the same. 3. Calculated the covariance between the market and respective companies return and the Beta values for the respective companies using:
Betaj=cov(rj,,rm )/Var(rm )
Where,
rj measures the rate of return of the company ‘j’, rm measures the rate of return of the market (BSE200), and cov(rj,rm) is the