You are currently working as an analyst at Financial Consulting Bhd. Your boss has instructed you to form an equity fund portfolio which consists of two consumer products companies. The portfolios have total fund size of RM10 million. Before you can start with your analysis, you have to collect monthly stock prices of each stock in your portfolio over the last 24 months. (Hint: The selected companies should be listed in Bursa Malaysia)
You are required to:
(a) Describe the background (operation, management team, market,..etc) of the companies. (5 marks)
(b) Compute monthly stock return of each stock in your portfolio i n each of the last 12 months. Show your answers in organized tabular format. (10 marks)
(c) Compute average monthly stock return and standard deviation of returns of each stock over the last 12 months. (10 marks)
(d) Compute covariance and correlation between each possible pair of stocks in your portfolio. (5 marks)
(e) Compute portfolio’s return and standard deviation assuming funds are split equally in each of the two companies’ stocks. (10 marks)
(f) Recommend which you will invest stock separately or combine (portfolio) on the above calculation. (5 marks)