INVESTMENT MANAGEMENT

ASSIGNMENT

NAME: Likitha Y (1BF16MBA16)

Noor Fathima (1BF16MBA22)

Case: Is This the Right Stock

Sensex value HDFC value

17583.97 514.15
17636.8 518.3
17636.99 518.9
17362.87 511.3
17173.29 507.6
17145.52 515.3
17503.24 522.85
17587.67 519.85
17813.62 524.8
17919.3 527.05
17675.85 510.95
17466.2 507.7
17273.37 498.65
17316.18 504.85
17601.71 515.4
17196.47 502.6
17361.74 513.85
17052.78 510.55
17257.36 518.05
17121.62 513.3
17404.2 520.05
 Calculation of Daily Return: HDFC & Sensex

Daily Return HDFC Daily Return Sensex

0.80715 0.3004
0.1157 0.0010
-1.4646 -1.5542
-0.7236 -1.0918
1.5169 -0.1617
1.4651 2.0863
-0.5737 0.4823
0.9521 1.2847
0.4287 0.5932
-3.0547 -1.3585
-0.6360 -1.1860
-1.7825 -1.1040
1.2433 0.2478
2.0897 1.6489
-2.483 -2.3022
2.238 0.9610
-0.642 -1.7795
1.469 1.1996
-0.916 -0.7865
-0.506 -0.3680
1.830 2.0258
0.06536 -0.0410123

Mean Return of HDFC 0.06536

Mean Return of Sensex - -0.04101

 Calculation of Covariance & Beta

HDFC Deviation Sensex deviation Sensex(squared HDFC(squared

deviation) deviation)
0.7417 0.3414 0.11659 0.5502
0.0503 0.0420 0.0017 0.00253
-1.5300 -1.5132 2.2898 2.3409
-0.7890 -1.050 1.1043 0.6225
1.4515 -0.1206 0.0145 2.1070
1.3998 2.1273 4.5257 1.959
-0.6391 0.5233 0.2739 0.4085
0.8868 1.3257 1.7360 0.7864
0.3633 0.634 1.3111 0.1320
-3.1201 -1.325 1.1299 9.7350
-0.7014 -1.1450 0.0834 0.4920
-1.8479 -1.0630 2.8558 3.4147
1.177 0.2888 5.1133 1.3876
2.0243 1.6899 1.0041 4.098
-2.5488 -2.2612 3.0224 6.496
2.1729 1.0020 1.5393 4.721
-0.7075 -1.7385 0.5558 0.5006
1.4036 1.2406 0.4022 1.970
-0.9822 -0.7455 1.7575 0.9648
-0.5718 -0.3270 0.1069 0.3270
1.7654 2.0669 4.2721 3.1168
33.217 46.135

Covariance = 1.656988

Beta = 0.99766
Inference:

In this case Mr. Mohan wants to know whether stock price of HDFC Bank are in sync with the
market conditions are not.

By comparing the mean return of HDFC stock and that of market return for the particular period
of the time. We can say that even though market gives negative return. The stock prices gives
positive return which is good option to the investment.

By looking at the beta value 0.997 is less than 1 which means the stocks are less volatile. In
comparison with the market condition, with the stock beginning less risk Mr. Mohan can look for
investment in the stocks of HDFC.