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INTRODUCTION

A portfolio is a collection of securities, since it is rarely desirable to invest the entire funds of an

Individual in single, it is essential that every security be viewed in a portfolio context.

The expected rate of return should depend on expected return of each security contained in

portfolio.

Investing in securities such as shares, debentures and bonds in portfolio as well as exciting. It in

indecent rewarding, but involves a great deal of risk and calls or scientific knowledge as well asartistic skill.

It determines future risk and return in holding of individual security.

Portfolio risk can be reduced by adding security with greater individual risk that another security

in the portfolio. This is because; it depends on co-variance among returns of individual security.

OBJETIVES

1. The basic objective is to minimize risk

2. The purpose of study is to find out what percentage of investment should be invested

between two companies on the basis of risk and return.

3. This percentage helps in allocating the funds available for investment based on portfolio.

4. To determine co-efficient co-relation of portfolios.

5. To give suggestions regarding selection of securities to construct good portfolio.

6. To determine standard deviation and variance of portfolios.

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LIMITATIONS

1. This study was undertaken for short period of time, it is not detail in all aspects.

2. The study is restricted only to companies which are analyzed and hence conclusions

cannot be generalized for other companies.3. The portfolio risk varies from company to company.

4. The study was undertaken to analyzed portfolio management and investment decision for

a period of one month.

PURPOSE OF THE STUDY

The purpose of the study is to find out at what percentage of investment should be invested

between the two companies, on the basis of risk and return of each security in comparison. Thesepercentage help in allocation the funds available for investment based on portfolios.

The Methodology of the study consists of

Source of data collection

Statistical tool

Source of data collection:

The data had been collected through Primary and Secondary sources.

Primary Sources:

The data had been collected through project guide and staff of the Company.

Secondary Sources:

The data had been collected through Books, Journals and Websites.

Arithmetic average or mean:

The arithmetic average measures the central tendency. The purpose of computing an average

value for a set of observations is to obtain a single value, which is representative of all the items.

The mail objective of average is to arrive at a single value which is a representative of the

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characteristics of the entire mass of data and arithmetic average or mean of a series(sigma x)

divided by the number of items (N) constituting the series.

Thus, if X1,X2,X3...........................Xn are the given N observations. Then

STANDARD DEVIATION:

The concept of standard deviation was first suggested By Karl Pear Son in 1983. It

may be defined as the positive square root of the arithmetic mean of the squares of deviations of

the given observations from their arithmetic mean in short S.D may be defined as Root Mean

Square Deviation from Mean.

It is by far the most important and widely used measure of studying dispersions.For a set of N observations X1, X2 ...Xn with a mean X,

Deviations from Mean: (X1-X),(X2-X),.............(Xn-X)

Mean-square deviations from Mean: =1/N(X1-X)2+(X2-X)2+.................+(Xn-X)

Root mean square deviation from mean, i.e.

VARIANCE:

The square of standard deviation is known as Variance.

Variance is the square root of the standard deviation

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Variance = (S.D)2

Where, (S.D) is standard deviation

CORRELATION:

Correlation is a statistical technique, which measures and analyse the degree or extent to which

two or more variables fluctuate with reference to one another. Correlation thus denotes the inter-

dependence amongst variables. The degrees are expressed by a coefficient, which ranges

between -1 and +1. Thus direction of change is indicated by (+) or (-) signs. The former refers to

a sympathetic movement in a same direction and the later in the opposition direction.

Karl Pearsons method of calculating coefficient (r) is based on covariance of the concerned

variables. It was devised by Karl Pearson, a great British Biometrician.

This measure known as Pearsonian correlation coefficient between two

variables(series) X and Y usually denoted by r is a numerical measure of linear relationship and

is defined as the ratio of the covariance between X and Y (written as Cov(X,Y) to the product of

standard deviation of X and Y.

Symbolically,

Where xi = Xi-X,

yi = Yi-Y

xiyi = sum of the product of deviations in X and Y series calculated with reference to theirarithmetic means.

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REVIVIEW OF LITERATURE

INTRODUCTION TO PORTFOLIO MANAGEMENT

PORTFOLIO: The portfolio analysis begins where the security analysis ends and this fact

have important consequences for investors. Portfolios, which are combinations of securities may

or may not take on the aggregate characteristics of their individual part.

A portfolio is a collection of securities it is rarely desirable to invest the entire funds of an

individual or an institution in a single security, it is essential that every security be viewed in a

portfolio context.

Portfolio analysis considers the determination of future risk and return in holding various

blends of individual securities. Portfolio expected return is a weighted average of expected return

of individual security but portfolio variances, in short contrast, can be something less than a

weighted average of securities variances. As a result an investor can something reduce portfoliorisk by adding security in portfolio. This is because risk depends greatly on the co-variance

among return of individual securities.

Portfolio expected return in a weighted average the expected return of its securities, the

contribution each security to the portfolios expected return depends its expected return and its

proportionate share of the initial portfolios market value. It follows that an investor who simply

wants the greatest possible expected return should hold one security, the one which is considered

to have a greatest expected return.

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OBJECTIVES OF PORTFOLIO MANAGEMENT

The objectives of portfolio management can be classified as under.

1. BASIC OBJECTIVE

The basis objectives of portfolio management is

i. To maximize yield, and

ii. To minimize risk.

2. SECONDARY OBJECTIVE

i. Regular return

ii. Stable Income

iii. Appreciation of capital

iv. More liquidity

v. Safety of investment

vi. Tax benefits

NEED FOR PORTFOLIO MANAGEMENT

Portfolio management is a process encompassing many activities of investment in assets

and securities. It is dynamic and flexible concept and involves regular and systematic analysis

judgment and action. The objectives of this service is to help the unknown and investors with the

expertise of professionals in investment portfolio management, it involves construction of a

portfolio based upon the investors objectives, constraint preferences for risk and return and tax

liability. The portfolio is reviewed and adjusted from time to time in tune with the market

conditions, the evaluation of portfolio is to be done in terms of targets set of risk and return.

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Portfolio construction refers to the allocation of surplus funds in hand among a

variety of financial asset open for investment. Portfolio theory concern itself with the principles

governing such allocation. The modern view of investment is oriented more towards the

assembly of proper combinations of individual securities to form investment portfolios. A

combination of securities hold together well give a beneficial result if they are grouped in a

manner o secure higher return after taking into consideration the risk element.

Modern portfolio theory believes in the maximization of return through a combination of

securities. The modern portfolio theory discusses the relationship between different securities

and then draws inter-relationship of risk between them. It is not necessary to achieve success

only by trying to get all securities of minimum risk. The theory states that by combining a

security of high risk, success can be achieved by an investor in making a choice of investmentoutlets.

ELEMENTS OF PORTFOLIO MANAGEMENT

PORTFOLIO MANAGEMENT IS AN ON-GOING PROCESS INVOLVOING THE

FOLLOWING BASIC TASKS

1. Identification of the investors objectives, constraints and preferences.

2. Strategies are to be developed and implemented in tune with Investment policy

formulated.

3. Review and monitoring of the performances of the portfolio

4. Finally the evaluation of the portfolio.

RISK

Risk is uncertainty of the income/capital appreciation or loss of both. All investments arerisky. The higher the risk taken, the high-risk the return but proper management of risk involves

the right choice if investment whose risk are compensating, the total

Risk of two companies may be different and even lower than the risk of a group of two

companies if their risks are offset by each other.

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The two major types of risks are systematic or market related risks & unsystematic or

company related risks. The systematic risks are the market problems, raw material availability,

tax policy or any Government pricy, inflation, risk interest risk and financial risk.

The unsystematic risk is mismanagement, increasing inventory, wrong financial policy,default marketing etc.

The company specific risk (unsystematic risks) can be reduced by diversifying into a few

companies belonging to various industry group, asset groups or different types of instruments

like Equity shares, bonds, distributors etc. These asset classes are bank deposits, company

deposits, gold, silver, land, real-estates, equity share etc., Industry groups are tea, sugar, paper

chemical, steel electricity, electronics, computer software etc. Each of them has different risk-

return characteristics and investments based on individual preferences. The second category of

risk (systematic risk) is managed by the use of data of different company shares.

RETURN ON PORTFOLIO

Each security in a portfolio contributes returns in the proportion of its investments in

security. These the portfolio expected return is the weighted average of the expected returns,

from each of the securities, with weights representing the proportionate share of the security in

the total investment. Why does an investor have so many securities in is portfolio? If the security

ABC gives the maximum return; why not be invest in that security all his funds and these

maximize return? The answer to this question lies in the

investors perception of risk attached to investments, his objectives of income, safety,

appreciation, liquidity and hedge against loss of value of money etc. This pattern of investment

in different asset categories. Security categories, type of instruments, Etc., Would all be

described under the caption of diversification, which aims at the reduction or even elimination of

non-systematic or company related risk and achieve the specific objectives of investor.

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PORTFOLIO RISK

Risk on portfolio is different from the risk on individual securities. This risk is reflected in

the variability of the return from zero to infinity. The expected return depends probability of the

return and their weighted contribution to the risk of the portfolio. There are two measures of riskthis context one is the absolute deviation and the other standard deviation.

Most investors invest in a portfolio of assets, as they do not want to put all this eggs in one

basket. Hence, what really matters to them is not the risk and return of stock in isolation, but the

risk and return of the portfolio as a whole.

Risk-Return Analysis

Risk and return are the most important concepts in finance. In fact, they are the foundationof the modern finance theory. All Investments have some risks. Investment in shares of

companies has its own risks or uncertainty. These risks arise out of variability of return or yields

and uncertainty of appreciation or deprecation of shares prices, loss of liquidity etc. The risk over

time can be represented by the variance of the return, while the return over time can be

represented by the variance of the return, while the return over time is capital appreciation plus

payout divided by the purchase price of the share.

Normally, the higher the risk that the investor takes, the higher is the return. There is, however a

risk less turn on capital of about 12% which is the bank rate changed by the RBI or long term

yielded on government securities at around 13% to 14%. This risk less return refers to lack of

variability of return and no uncertainty in the repayment of capital. But other risks such as loss of

liquidity due to parting with money etc., may however remain but are rewarded; by the total

return on the capital. Risk return is subject to variation and the objective of the portfolio manager

is to reduce that variability and thus reduce the risk by choosing an appropriate portfolio.

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There are two types of risks, namely.

I. Market risk or systematic risk, and

II. Company risk or unsystematic risk.

The unsystematic risk can be reduced by diversifying the portfolio of scripts to an

optimum level of about 15 shares. These scripts should be so chosen that the risk on each of

them is diverse and their variability of return is also different. By investing in such a diverse set

of scripts, the total risk can be reduced as some of them may have positive and other negative co-

variance and they may vary in the degree of risk as well.

The unsystematic risk can be lowered by diversifying into basket of scripts. Thus a degree

of diversification of investment is necessary pre-requisite of portfolio management and forreducing the risk.

In the management of a portfolio, the problem of risk management is vital, given the

individual preference of portfolio holders the portfolio is to be constructed in such manner that

its exposure to the market related risks cannot be reduced the company related risks can be

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eliminated through a proper diversification into around 15 scripts of different groups of

industries and companies would be able to reduce the company related risks involved almost to

negligible proportion. An optimum degree of diversification can be secured which would

minimize risk and optimize return, if the co- variance of scripts included in the portfolio is less

than 1 to negative.

The co-efficient of correlation is also designed to measure the relationship between two

securities. It is given an indication of the variables being positively or negatively related to each

other. If the co-efficient of correlation is zero then it means that the returns on securities are

independent of one another. When correlation co-efficient is 1, the portfolio risk will be

minimum.

PORTFOLIO AND DIVERSIFICATION

A combination of securities that have risk and return features make up a portfolio,

portfolio may or may not on aggregate characterizes of individual facts.

Portfolio analysis takes the various risk factors for each industry and considers the mixed

effect of combined securities.

Portfolio selection involves choosing the best portfolio to suit the risk return preferences

of the portfolio investors.

Management of portfolio is a dynamic activity of evaluating and revising the portfolio in

terms of its objectives.

Thus the risk reduce the basic principle is that if a portfolio holds several asset or securities

which many include cash also, even if one goes bad the other will provide protection with the

loss

The diversification can be either vertical or horizontal. In vertical diversification a

portfolio can have scripts of different companies within the same industry. In horizontal

diversification one can have different scripts chosen from different industries.

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EXAMPLES OF VERTICLE DIVERSIFICATION

(A) Cement Industry (B) Textile Industry

ACC Limited Garden silk Mill JK Cement Reliance Industry

L and T Grasim Industry

Birla Cement Bombay dying

Vishnu Cement Barcode Rayon

HORIZONTAL DIVERSIFICAITON

Tesco Limited {MFG) ACC Limited {Cement}

Cotton Silk {Textiles}

Infosys limited {Software}

BSE Limited {Power}

L and T Limited {Construction}

Diversification should neither be too much nor to less. It should be an adequate

diversification according to the size holds the better it is, according to the modern approach

diversification should be related to the quality of scripts which leads too the quality of portfolio.

Experience has shown that beyond the certain securities by adding more securities expensive.

SIMPLE DIVERSIFICATION REDUCE RISK

An assets total risk can be divided into systematic plus unsystematic risk, as shown below:

Systematic risk (undiversifiable risk) + unsystematic risk (diversifiable)- Total risk= Va

Unsystematic risk is that portion of the risk that is unique to the firm (for the example, risk due to

strikes and management errors Unsystematic risk can be reduce to Zero by simple

diversification.

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Simple diversification is the random selection of securities that is to be added to a

portfolio. As the number of randomly selected securities added to a portfolio is increased, the

level of unsystematic risk approaches zero. However, market-related systematic risk cannot be

reduced by simple diversification. This risk is common to all securities. How total risk

approaches systematic risk as the number of securities in a portfolio increase as in figure below.

Y UNSYSTEMATIC RISK

TOTAL RISK

RISK

0 SYSTAMATIC RISK

RANDOMLY SELECTED SECUTITIES IN THE PORTFOLIO

MORKOWITZ MODEL

THE MEAN-VARIANCE CEIFERTION:

Dr.Harry M. Markowitz is credited with developing the first modern portfolio analysis

model since the basic elements of modern portfolio theory emanate from a series of proposition

concerning rational investor behavior set forth by Markowitz, then of the rand corporation, in

1952 and later in a more complete monograph sponsored by the cowls foundation. To reach thisobjective, Markowitz model is a theoretical framework for the analysis of return choice decision

is based on the concept of efficient portfolio.

A portfolio is efficient when it is expected to yield the highest return for the level of risk

accepted or, alternatively, the smallest portfolio risk for a specified level of expected return, to

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build an efficient portfolio an expected return level is chosen, and asset are substituted until the

portfolio combination with the smallest variance at the return level is found. As this process is

repeated for other expected returns, set of efficient portfolios is generated.

ASSUMPTIONS

The Markowitz model is based on several assumptions regarding investor behavior.

I. Investors consider each investment alternative as being represented by a probability

distribution of expected returns over some holding period.

(II) Investors maximize one period expected utility and process utility curve, which

demonstrates diminishing marginal utility of wealth.

II. Individual estimates risk on the basis of the variability of expected return.

III. Investors base decision slowly on expected return and various (or standard deviation) of

return only.

IV. For a given risk level, investors prefer high return lower returns, similarly for a given

level expected return, investor prefer less risk to more risk.

Under these assumption, a single asset or portfolio of asset it considered to be efficient if no

other asset or portfolio of asset offers higher expected return with the same(or lower) risk or

lower risk with the same (or higher) expected return.

THE SPECIFIC MODEL

In developing this model, Markowitz first disposed of the investment behavior rule that the

investor should maximize expected return. This rule implies that the non diversified single

security portfolio with the higher expected return is the most desirable portfolio only by buying

that single security can expected return be maximized. The

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Single security portfolio would obviously be preferable if the investor is perfect certain

that this highest expected return would turn out to be the actual return, However, under real

world conditions of uncertainty, most risk adverse investors join with

Markowitz in discarding the role of calling for maximizing expected returns. As an alternative,

Markowitz offers the expected returns/variance of return rule.

Markowitz has shown the effect of diversification by reading the risk of securities,

according to him the securities with co-variance which is either negative or low amongst

themselves is the best manner to reduce risk. Markowitz has been able to show that securities

which have less than positive correlation will reduce risk without, in between securities in theportfolio will show less risk. According to him, Investing in a Large number of securities is not

the right method of investment. It is the right kind of securities which bring the maximum

results.

The following formula has been given by Henry Markowitz for a two securities portfolio.

p = (X1)2 (1)2 + (X1)2(2)2 - 2(X1)(X2)(r12)(1)(2)

2p = (X1)2(2)2+(X1)2( 1)2 2(X1)(X2)(r12)( 1)(2)

Where

2p = Variance of the portfolio return

p = Standard deviation of the portfolio return

X1 = Proportion of the portfolio invested in security 1

X2 = Proportion of the portfolio invested in security 2

1 = Standard deviation of the return on security 1

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2 = Standard deviation of the return on security 2

r12 = Co-efficient of co-relation between the returns on securities 1 and 2

EFFICIENT FRONTIEF OR EFFICIENT PORTFOLIO

To construct an efficient portfolio, we have to conceptualize various combinations of

investments in a basket and designate them as portfolio 1 and n. The expected return form these

portfolios have to be worked out. The risk on these portfolios is to be estimated by measuring the

standard deviation of different portfolios returns. In order to understand more easily we will see

Markowitz graphical selection of portfolio.

If there are n asset available the capital markets, we can constitute two assets portfolio,three asset portfolio, four asset portfolio, and ---------------n asset portfolio. For each portfolio

there are n possible proportions of investments. Together they results in an almost infinite

number of portfolios. The risk and return can be seen in the graph below.

Xp

Ry Y

Rx X

x y p

FIG: EFFICIENT FRONTIER

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OBSERVATIONS

The Markowitz graphic selection of portfolio is said to be not an efficient one because if

an investor is ready to take risk at X he can vote the last portfolio y. From the risk Z and Rx

point of view it is not an efficient portfolio.

X is a dominated portfolio

Y and Z is a dominant portfolio

When the outer points of an efficient portfolio are jointed a shell is formed or a broken egg is

formed. The shape depends upon degree of correlation among securities, therefore the shell is

called attainable set, feasible set or opportunity set, it is so called because all the availableinvestment opportunities in the market like either on the border or with in the border.

CONCEPT OF EFFICIENT PORTFOLIO

Assume that x is selected it is an in efficient portfolio because.

I. If he is prepare to take a risk of X for the same risk Y. Given in the higher rate of RY.

Therefore Y is a dominant portfolio and X is a dominated portfolio

II. If an investor is satisfied with the return of RX the same return can be earned by choosing

portfolio Z, which has a smaller risk of Z (As against larger risk X).

The dominance principle state that among all the investment opportunity available with a

given return, the investment with the least risk is the most desirable one or among the investment

in a given risk class, the one with the highest return with the most desirable one. Risk principle is

also called efficient set theorem.

In the light of this the segment A, B is the relevant portion of the feasible set is called the

Markowitz efficient frontier. It is so called because all efficient portfolios lie on this frontier.

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An efficient portfolio is one, that gives the highest return for given return or a minimum risk for

a given return, these efficient portfolios are also refer as mean variance efficient portfolios. The

shape of the efficient frontier is given by RP/p

MODIFICTION TO THE EFFICIENT FRONTIER

Two modifications to the efficient frontier must be discussed:

WHAT HAPPENS WHEN SHORT SELLING IS ADDED, and WHAT HAPPENS WHEN

LEVERAGED PORTFOLIOS ARE ADDED?

A.SHORT SELLING

The ability to short sell has two effects on the efficient frontier the frontier probable shifts up and

to the left, and it continues to the right. The ability to short sell securities created a new set of

possible investment. A security sold short produces a positive return when as security has a large

decrease in price and a negative return when its price increases. It potentially improves the

efficient frontier because the ability to short sell doubles the number possible investments.

Since investors are free not to short sell the introduction of the ability to short sell cant make

investors worse off. If it never pays to short sell, the worst that can happen is that the efficientfrontier is unchanged without short sales, all investors can do is not to holds securities that they

believe do poorly.

With short sales an opportunity is created that is expected to have almost the opposite

characteristics of the investment when purchased. With short sales it is possible. In a sense to

disinvest in poor investments (hold them in negative amount) and hence gain it they do poorly. If

it ever pays to short sell any securities the efficient frontier is shifted up and to the left. This is an

example of the old economic adage that a decision maker cant be worse off by being givenadditional choices and the decision maker may well better off. In addition short sales allow the

investor to decrease or eliminate market risk in a large well diversified portfolio, unique risk is

eliminated and only.

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SHORT SALES ALLOWED

NO SHORT SALES

Risk(standard deviation)

Market risk remains short sales allow the reduction of market risk to very low levels. Thus the

addition of short positions operates as a hedging mechanism, reducing the market exposure of aportfolio.

The extension of the efficient frontier to the right arises from the tendency of a very large

amount of short selling to increase the risk and return on the portfolio, this increase in risk is

easy to understand. Short sales it involves unlimited loss, the short sales can increase the possible

lives of the return for any level of risk short sales can be abused and position taken that are too

extreme. However short selling per se in not bad. Like any other investment strategy, it can be

used prudently or imprudently.

B.LEVERAGED PORTFOLIO

Markowitz model, which recognized the existence of both systematic and unsystematic risk, did

not allow the borrowing and lending opportunities. The investor is assumed to have a certain

amount of initial wealth to invest for a given holding period, of all the period that are available,

the optimal one is shown to correspond to the point where one of the investors indifference

curves in tangent to the efficient set.

At the end of the holding period, the investors initial wealth will have either increased or

decreased, depending on the portfolios rate of return. Again in the Markowtz is approach it is

assumed that the asset that the asset has an uncertain return over the investors holding period.

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Since none of the assets has a perfectly negative correlation with any other asset, all the portfolio

also have uncertain returns over the investors holding period, and these are risky, furthermore, in

the Markowitz approach, to purchase a portfolio of asset. This means that the investor is not

allowed to use financial leverage. To expand the Markowitz approach investor can consider risk

free assets and financial leverage by first investing is not only risky assets but also in risk free

assets, and second by borrowing money at a given rate of interest.

1. RISK FREE ASSET

Investment in risk free assets is often referred to as risk free lending. Since this approach

involves investing for a single holding period, it means that the return of the risk free asset iscertain that is if the investor purchases this asset at the beginning of the holding period, then the

investor knows exactly what the value of the asset will be at the end of the holding period. Since

there is no uncertainty about terminal value of the risk free asset, standard deviation of the risk

free assets is by definition zero. In turn this means that the co variance between the rate of return

on the risk free asset and the rate of return on any risky is zero.

2. INVESTING IN BOTH THE RISK FREE ASSET AND RISK ASSET:

The efficient frontier would be altered substantially if a risk free security is included

among available investment opportunities. While a risk free security does not exist in the strict

sense of the word, there are securities which promise return with relative certainty. They are

characterized by an absence of default risk and interest rate, full payment of principle is assured

without serious prospect of capital, loss arising from changes in the level of interest rates. Risk

free securities of this type include cash, short-term treasury bills, and time deposits in banks or

savings and loan association, cash would be dominated by the other positive return investments.

Given the opportunity to either borrow or lend at the risk free rate, and investor

proceeds to identify the optimal portfolio by plotting his or her indifference curves on graph and

noting where one of them is tangent to the in different efficient set.

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For example portfolio, A has an expected return of 11 percent and standard deviation of

12.5 percent. However portfolio A is not efficient, since portfolio B has the same expected return

bur a standard deviation of only 8 percent. Portfolio H has a higher return and the same risk as

portfolio. A it is more attractive than portfolio A but not efficient, Since portfolio F has a still

higher return with the same degree of risk as C and H.

Portfolio A is a single-equity portfolio that has the highest return and risk, in no way can

investor return improves on its return-to-risk ratio. If investor moves to the right on the curve,

return decrease and risk decreased. Hence investor is on the efficient frontier. It represent all

possible portfolios that are efficient as investor moves the left and down.

The only way the investor can obtain a high return on the efficient frontier is to accept a higher

amount of risk.

To be realistic, assume that the investors borrowing rate is above the lending rate. Combination

of lending and borrowing with a portfolio are risky asset lie along a straight

Line with lending and borrowing the efficient frontier. Notices that for all investors lend and

borrow improve their opportunities. The ability to lend is hardly controversial the borrowing part

may be more controversial, borrowing and buying a less risky portfolio can give higher returns

and less risk and buying a more risky portfolio.

Higher expected return at the same risk level by borrowing of course borrowing like

short sales or almost any financial mechanism can be abused. It can be used to take extreme and

imprudent risk positions. On the other hand it can be used to enhance performance. Rejecting

borrowing entirely would throughout positive opportunities for example, consider an investor

wishing to have a high portfolio with higher expected return than offered by portfolio B. This

investor would have the same expected return and less risky by buying portfolio B and

borrowing than by buying portfolio Y, which does not involving borrowing.

Returning to the concept of the efficient frontier, it is necessary to deal further in to

the subject of prudent investment. In an efficient frontier an investor should never hold a security

or portfolio that lies below that frontier. Because all single securities expect the riskless asset lie

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below the frontier. There is almost never a situation where a single security is efficient all

efficient portfolios are well diversified.

INVESTMENT DECISION

MEANING OF INVESTMENT

In the financial sense investment is to commitment persons funds to drive future income in the

form of interest divided premium pension benefits or appreciation in the value of their capital

purchasing of shares, debentures, post office savings certificate Insurance policies all

investments in the financial sense, such investment generate financial assets.

In economic sense investment means the net addition to the economys capital stock whichconsists of good and service that are used in the production of other goods and

services.Investment in this sense includes the formation of new productivity capital in the form

of new construction, plant and machinery inventories etc, such investment generate physical

assets.

DEFINATION OF INVESTMENT

According to F.Amling, Investment may be defined as the purchase by an individual orinstitution investor of a financial or real asset that produces a return proportional to the risk

assumed over some future investment period. According to D.E Fisher and R.J. Jordan,

Investment is a commitment of funds made in the expectation of same positive rate of return. If

the investment is properly undertaken the return will be commensurate with risk the investor

assumes.

CONCEPT OF INVESTMENT

Investment will generally be used in its financial sense and as such investment is the

allocation of monetary resources to assets that are expected to yield some gain or positive return

over a given period of time. Investment is a commitment of persons funds to derive future

income in the form of interest, dividends, rents premium, pension benefits or the appreciation of

value of his principle capital.

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Any investor would like to know the media or range of investments so that he can use his

discretion and save in those investments which will given him both security and stable return.

The ultimate objective of the investor is to derive a variety of investment that meet his preference

for risk and expected return. The investors will select the portfolio which will maximize his

utility. Another important consideration is the temperament and psychology of the investor. It is

not only the construction of a portfolio that will promise the highest expected return, but it is the

satisfaction of the need of the investor.Many types of investment media or channels for making

investments are available. Securities ranging from free instruments to highly speculative shares

and debentures are available for an alternative investment.

All investments are risky as the investor parts with his money. An efficient investor with

proper training can reduce the risk and maximize returns lie can avoid pitfalls and protect hisinterests.

Money and information are the basis and the first requirement of investment is the

availability of money or savings but money is not enough as investments are generally made on

the basis of information of the companies. Instruments industry and economy both money and

information flow help making investment management.

There are different methods of classifying the investment avenues. A major classificationis physical investment and financial investments. They are physical, if savings are used to

acquire physical assets, useful for consumption or production. Some physical assets like ploughs,

tractors or harvesters are useful in agricultural production. A few useful physical assets like cars,

jeeps etc., are useful in business. Many items of physical assets are not useful for further

production or goods or create income as in the case of consumer durables, gold, silver etc.

Among different types of investment, some are marketable and transferable and others are not

examples of marketable assets are share and debentures of public limited companies particularly

the listed companies in are investments investment in Bank deposits, provident fund and pension

funds insurance certificates, post office deposits, National savings certificate, company deposits

private limited companies shares etc.

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INVESTMENT PROCESS

The investment process may be described in the following stages.

INVESTMENT POLICY:

1. The government or the investors before proceeding into investment formulates the policy

for the systematic functioning. The essential ingredients of the policy are inevitable

funds, objectives and the knowledge about the investment alternative and market.

2. INVESTMENT ANALYSIS:

After arranging a logical order of investment preferred the next step is to analyses the securities

available for investment. The investor must make a comparative analysis of types of industry

kind of securities etc. The primary concerns at this stage would be to form beliefs regarding

future behavior of prices and stocks the expected return and associated risks.

3. INVESTMENT VALUATION

Investment value in general in taken to be the present worth to the owners of future benefits from

investment. The investor has to bear in mind the value of these investment an appropriate set of

weights have to be applied with the use of forecasted benefits to estimate the value of the

investment asset such as stocks debentures and bonds and other assets. Comparison of the value

with the current market prices of the asset allows a determination of the relative attractiveness of

the asset. Each asset much be value on its individual merit.

4. PORTFOLIO CONSTRUCTION AND FEEDBACK:

Portfolio construction requires knowledge of the different aspects of securities in relation to

safety and growth of principle, liquidity of assts etc. In this stage, we study. Determination of

diversification level, consideration of investment timing, selection of

Investment assets, allocation of invisible wealth to different investment, evaluation of portfolio

for feedback.

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INVESTMENT DECISION-GUIDELINES FOR EQUITY INVESMENT

Equity shares are characterized by price fluctuation, which can produce substantial gains of

inflict sever losses. Given the volatility and dynamism of the stock, market investor requires

greater competence and skill-along with a touch of good luck too to invest in equity shares hereare some general guidelines to play to equity game irrespective of whether you are aggressive or

conservation or conservative.

Adopt a suitable formula plan

Establish value anchors

Assess market psychology

Combine fundamental and technical analysis

Diversify sensibly

Periodically review and revise your portfolio.

REQUIREMENT OF PORTFOLIO:

1. Maintain adequate diversification when relative values of various securities in the

portfolio changes.

2. Incorporate new information relevant for risk return assessment.

3. Expand or contract the size of portfolio to absorb funds or with draw funds

4. Reflect changes in investor risk disposition.

QUALITIES FOR SUCCESSFUL INVESTING:

Contrary thinking

Patience Composure

Flexibility and

Openness

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The Organization

The National Stock Exchange of India Limited has genesis in the report of the High Powered

Study Group on Establishment of New Stock Exchanges. It recommended promotion of a

National Stock Exchange by financial institutions (FIs) to provide access to investors from all

across the country on an equal footing. Based on the recommendations, NSE was promoted by

leading Financial Institutions at the behest of the Government of India and was incorporated in

November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in

April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June

1994. The Capital Market (Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.

The following years witnessed rapid development of Indian capital market with introduction of

internet trading, Exchange traded funds (ETF), stock derivatives and the first volatility index -

IndiaVIX in April 2008, by NSE.

August 2008 saw introduction of Currency derivatives in India with the launch of Currency

Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by

NSE on 31st August 2009, exactly after one year of the launch of Currency Futures.

With this, now both the retail and institutional investors can participate in equities, equity

derivatives, currency and interest rate derivatives, giving them wide range of products to takecare of their evolving needs

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NSE-Technology

Across the globe, developments in information, communication and network technologies have

created paradigm shifts in the securities market operations. Technology has enabled

organisations to build new sources of competitive advantage, bring about innovations in products

and services, and to provide for new business opportunities. Stock exchanges all over the world

have realised the potential of IT and have moved over to electronic trading systems, which are

cheaper, have wider reach and provide a better mechanism for trade and post trade execution.

NSE believes that technology will continue to provide the necessary impetus for the organisation

to retain its competitive edge and ensure timeliness and satisfaction in customer service. In

recognition of the fact that technology will continue to redefine the shape of the securitiesindustry, NSE stresses on innovation and sustained investment in technology to remain ahead of

competition. NSE's IT set-up is the largest by any company in India. It uses satellite

communication technology to energise participation from around 200 cities spread all over the

country. In the recent past, capacity enhancement measures were taken up in regard to the

trading systems so as to effectively meet the requirements of increased users and associated

trading loads. With upgradation of trading hardware, NSE today can handle up to 15 million

trades per day in Capital Market segment. In order to capitalise on in-house expertise in

technology, NSE set up a separate company, NSE Technology Services Ltd. which is expected to

provide a platform for taking up all IT related assignments of NSE.

NEAT is a state-of-the-art client server based application. At the server end, all trading

information is stored in an in-memory database to achieve minimum response time and

maximum system availability for users. The trading server software runs on a fault tolerant

STRATUS main frame computer while the client software runs under Windows on PCs.

The telecommunications network which was using X.25 protocol and is the backbone of the

automated trading system is being upgraded to use the more popular and modern IP Protocol.

This is a major project involving use of X.25 and IP in parallel and ensuring smooth transition to

IP. Each trading member trades on the NSE with other members through a PC located in the

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trading member's office, anywhere in India. The trading members on the various market

segments such as CM / F&O, WDM are linked to the central computer at the NSE through

dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX

servers, procured from HP for the back office processing. The latest software platforms like

ORACLE 10g RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the

Exchange applications. The Exchange currently manages its data centre operations, system and

database administration, design and development of in-house systems and design and

implementation of telecommunication solutions.

NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it

supports more than 2000 VSATs and 3000 leased lines across the country. The NSE- network is

the largest private wide area network in the country and the first extended C- Band VSATnetwork in the world. Currently more than 9000 users are trading on the real time-online NSE

application. There are over 15 large computer systems which include non-stop fault-tolerant

computers and high end UNIX servers, operational under one roof to support the NSE

applications. This coupled with the nation wide VSAT network makes NSE the country's largest

Information Technology user.

In an ongoing effort to improve NSE's infrastructure, a corporate network has been implemented,

connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate network

enables speedy inter-office communications and data and voice connectivity between offices.

In keeping with the current trend, NSE has gone online on the Internet. Apart from having

multiple internet links and our own domain for internal browsing and e-mail purposes, we have

also set up our own Web site. Currently, NSE is displaying its live stock quotes on the web site

(www.nseindia.com) which are updated online.

NSE today allows members to provide internet trading facility to their clients through the use of

NOW (NSE on web), a shared web infrastructure.

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Our Group Associate/Affiliate Companies

NSCCL

NCCL NSETECH

IISL

DotEx Intl. Ltd.NSE.IT

29
http://www.nseindia.com/content/us/us_asscos.htmhttp://www.nseindia.com/content/us/us_nseit.htmhttp://www.nseindia.com/content/us/us_dotex.htmhttp://www.nseindia.com/content/us/us_iisl.htmhttp://www.nseindia.com/content/us/us_nsetech.htmhttp://www.nseindia.com/content/us/us_nccl.htmhttp://www.nseindia.com/content/us/us_nsccl.htmhttp://www.nseindia.com/content/us/us_organisation.htmhttp://www.nseindia.com/content/us/us_asscos.htm


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COMPANY PROFILE

A world of intelligent investing

Ever since its inception in 1993, Networth Stock Broking Limited (NSBL) has sought

to provide premium financial services and information, so that the power of investment is vested

with the client. We equip those who invest with us to make intelligent investment decisions,

providing them with the flexibility to either tap into our extensive knowledge and expertise, or

make their own decisions. NSBL made its debut into the financial world by servicing

Institutional clients, and proved its high scalability of operations by growing exponentially over a

short period of time. Now, powered by a top-notch research team and a network of experts, we

provide an array of retail broking services across the globe - spanning India, Middle East, Europe

and America. Currently, we are a Depository participant at Central Depository Services India

(CDSL) and aim to become one at National Securities Depository (NSDL) by the end of thisquarter. Our strong support, technology-driven operations and business units of research,

distribution and advisory coalesce to provide you with a one-stop solution to cater to all your

broking and investment needs. Our customers have been participating in the booming

commodities markets with our membership at the Multi Commodity Exchange of India (MCX)

and National Commodity & Derivatives Exchange (NCDEX) through Networth Stock.Com Ltd.

NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay Stock

Exchange Ltd (BSE) on the Capital Market and Derivatives (Futures & Options) segment . It is

also a listed company at the BSE.

Corporate overview

Networth is a listed entity on the BSE since 1994

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The company is professionally managed with experience of over a decade in broking and

advisory services

Networth is a member of BSE, NSE, MCX, NCDEX, AMFI, CDSL

Current network in India with 256 branches and franchise. Presence in major metros and

cities

Empanelled with prominent domestic Mutual Funds, Insurance Companies, Banks,

Financial Institutions and Foreign Financial Institutions.

Strong experienced professional team

50000+ strong and growing client base

Average daily broking turnover of around INR 5 billion

AUM with Investment Advisory Services of around INR 6 billion

NSBL - Objectives of the Company:

To increase its investors all over the country

To provide better services to their clients

To maintain good relation with the clients

Increasing the profits of the company

To lead their transactions under the control Act of Securities Exchange Board of India

1992

NSBL - Product / Service produced:

Here the product means service relate to the company the company Brokerage Services. Its has

spreaded across over the country with experienced and expertized in the Brokerage services

rendered by the Brokers in their Branches to their Investors..

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NSBL Operating Results:

The Operating Results of the NSBL company is satisfactory compare to its competitors are India

Bulls, Networth Stock Broking ltd, India info line etc., They are giving quality services to their

clients and improving their retained gains. Through this they are creating new clients throughadopting different strategies for attracting the clients towards its business then its future glorious.

Infrastructure

A corporate office and 3 divisional offices in CBD of Mumbai which houses state-of-the-

art dealing room, research wing & management and back offices.

All of 256 branches and franchisees are fully wired and connected to hub at Corporate

office at Mumbai. Add on branches also will be wired and connected to central hub

Web enabled connectivity and software in place for net trading.

200 operative IDs for dealing room

State of the Art accounting and billing system, on line risk management system in place

with 100% redundancy back up.

In house technology back up team to ensure un-interrupted connectivity.

Products and services portfolio

Retail and institutional broking

Research for institutional and retail clients

Distribution of financial products

Corporate finance

Net trading

Commodities Broking

Depository services

The Networth connectivity with 256 branches and growing

For NSBL , financial planning is about more than statistics, it's about helping clients plan

for their goals & achieving them. Our unique approach to financial planning helps our

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clients save, spend, invest and protect the things that are important to them. NSBL

believe financial planning should be a long-term and collaborative relationship.Working

together with NSBLyou'll define your goals, develop a plan to help you get there and

then track your progress along the way.

Our Financial Planning Process -My Plan

1.Identify&Prioritize

Together NSBL will mutually define your personal and financial goals, understand your time

frame for results and discuss, if relevant, how you feel about risk. Post that we will prioritize

them and draw up a clear picture for your financial future.

33

Resear

chRepor

tsonCompany,Secto

r,E

conomy

Depositor

yasvaluechain

Services

Onl

ine&Off

linebro

kinginEquity&

Derivatie

s

Onlin

e&offlinebrokingincommodities

Nettra

dingasvaluechain-inoffing

Portfo

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e

CorporateFinance

Invest

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2.Collate

We will collate and review all the necessary documents such as investments, tax returns,

insurance policies, retirement plans etc.

3.Analyze

NSBL ll analyze your information to assess your current situation and determine what you must

do to meet your goals. This could include analyzing your assets, liabilities and cash flow, current

insurance coverage, investments or tax strategies and how these elements may impact each other.

4.Recommend

NSBL ll provide recommendations that address your goals. NSBL ll also go over the

recommendations with you to help you understand them so that you can make informeddecisions. NSBL ll understand your concerns and revise the recommendations as appropriate.

5.Act

Mutually NSBL will agree on how the recommendations will be carried out. NSBL may carry

out the recommendations or serve as your "coach", coordinating the whole process with you.

6. Track

As goals and needs evolve over time, NSBL ll track your progress as part of the ongoingprocess and make necessary modifications

NSBL GROUP COMPANIES

Networth Stock Broking Ltd. [NSBL]

NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay Stock

Exchange Ltd (BSE) in the Capital Market and Derivatives (Futures & Options) segment. NSBL

has also acquired membership of the currency derivatives segment with NSE, BSE & MCX-

SX. It is Depository participants with Central Depository Services India (CDSL) and National

Securities Depository (India) Limited (NSDL). With a client base of over 1L loyal customers,

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NSBL is spread across the country though its over 230+ branches. NSBL is listed on the BSE

since 1994.

Networth Wealth Solutions Ltd. [NWSL]

NWSL is into the business of delivery of Financial Planning & Advice. Its vision is to Advice

& Execute money related solutions to/for our customers in the most Convenient & Consolidated

manner, while making sure that their experience with us is always pleasant & memorable

resulting in positive advocacy. The product & Services include Financial Planning, Life

Insurance, On-line Trading Account, Mutual Funds, Debentures/Bonds, General Insurance,

Loans and Depository Services.

Networth Stock .Com Ltd. [NSCL]

NSCL is the commodities arm of NSBL. It is a member at the Multi Commodity Exchange of

India (MCX) and National Commodity & Derivatives Exchange (NCDEX) and is backed by

solid research & analytics in Commodities.

Networth Soft Tech Ltd. [NSL]

NSL is an ISO 9001:2000 Certified Company. It is into Application Development &maintenance. Building & Implementation of packaged software across various functions within

the Financial Services Industry is at its core. It also provides data center services which include

hosting of websites, applications & related services. It combines a unique delivery model infused

by a distinct culture of customer satisfaction.

Ravisha Financial Services Pvt Ltd [RFSL]

RFSL, a RBI registered NBFC, is primarily into the business of lending & borrowing funds

against securities.

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NSBL Products and Services

Equity

Derivatives

Currency Derivatives

IPO

Commodities

Depository Services

Portfolio Management Services

Wealth Management Services

Online Platform

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DATA ANALYSIS AND INTERPRETATION

IMPLEMENTATION OF STUDY:

Share price exercised from 15th Jan to 26th Feb

DATE GMR DLF TATA RPOWER BAJAJ

15-Jan-10 67.55 386.3 1456.6 159.3 1726.918-Jan-10 67.55 387.3 1443.25 159.6 1735.719-Jan-10 66.25 379.7 1419.15 156.75 1776.2520-Jan-10 65.05 373.7 1421.05 156.9 1820.5521-Jan-10 63.9 363.55 1356.7 152.95 1798.122-Jan-10 62.8 352.75 1334.05 150.5 1786.8

25-Jan-10 62.05 344.15 1319.45 150.2 1731.927-Jan-10 59.4 317.45 1311.75 145.45 1670.328-Jan-10 61.5 324.3 1323.4 144.15 1683.629-Jan-10 59.95 333.65 1304.9 145.95 1747.71-Feb-10 60.9 332.35 1293.2 147.5 1713.452-Feb-10 59.25 326.35 1284.1 144.85 1685.23-Feb-10 58.7 336.1 1298.85 148.1 1709.94-Feb-10 55.2 321.35 1277.45 142.5 1683.555-Feb-10 52.6 308.7 1285.55 139.95 1683.75

6-Feb-10 55.45 314.55 1301.95 143.35 1721.38-Feb-10 56.15 311.5 1284.95 141.65 1699.159-Feb-10 55.5 305.95 1300.25 142.4 1728.6

10-Feb-10 55.35 301.65 1275.1 140.85 1773.211-Feb-10 56 307 1266 141.65 1788.7515-Feb-10 55.6 303.35 1239.65 141.05 1792.6516-Feb-10 56.3 309.75 1236.65 142.35 1797.517-Feb-10 56.6 305.8 1262.4 142.4 1839.1518-Feb-10 55.6 303.7 1252.95 141.55 1812.519-Feb-10 54.85 291.1 1240.35 139.8 1806.6

22-Feb-10 55 284.7 1254.6 139 1801.3523-Feb-10 55.65 290.25 1251.75 138.85 1721.824-Feb-10 55.3 288.85 1257.85 137.75 1747.4525-Feb-10 53.45 289.5 1269.35 136.8 1712.3526-Feb-10 54.8451 298.45 1213.15 138.1 1817.65

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DATE HEROHONDA MTNL BHARTI INFOSYS TCS

15-Jan-10 1625.35 88.05 317.4 2675.8 791.418-Jan-10 1694.6 90.05 320.7 2686.65 802.2

19-Jan-10 1664.1 89.25 320.55 2635.9 780.720-Jan-10 1688.65 86.45 331.5 2657.7 779.421-Jan-10 1653.2 84.95 322.4 2625.2 770.6522-Jan-10 1649.4 82.7 322.15 2575.6 757.8525-Jan-10 1621.45 82.3 330.9 2542.3 756.227-Jan-10 1550.15 77.95 322.9 2502.25 743.328-Jan-10 1539.1 75.55 313.65 2491.75 741.7529-Jan-10 1559 75.8 306.4 2475.5 736.21-Feb-10 1580.95 74.75 311.2 2451.25 746.152-Feb-10 1568.45 72.4 307.65 2439.95 738.43-Feb-10 1599.6 73.7 309 2473.2 752.954-Feb-10 1600.45 72.1 304.1 2429.05 738.75-Feb-10 1585.4 71 300.05 2352.7 723.56-Feb-10 1584.35 71.75 300.4 2379.45 729.78-Feb-10 1578.25 73.05 308.35 2403.6 724.159-Feb-10 1618.3 74.15 313.15 2473.8 735.15

10-Feb-10 1630.65 72.3 315.3 2466.95 732.311-Feb-10 1690.95 73.25 314.5 2498.45 742.715-Feb-10 1704.35 71.7 285.6 2498.65 746.1516-Feb-10 1695.4 72.65 271.6 2541.45 758.1517-Feb-10 1698.4 75.15 279.15 2518.65 758.65

18-Feb-10 1703 74.9 281.9 2533.65 758.819-Feb-10 1680.35 75.7 278.8 2532.4 750.5522-Feb-10 1707.25 74.6 276.9 2568.35 757.2523-Feb-10 1693.85 73.45 280.1 2581.3 762.124-Feb-10 1672.25 71.95 275.95 2576.3 765.3525-Feb-10 1700.25 71.35 276.25 2617.35 766.2526-Feb-10 1777.65 71.85 279.35 2601.95 761.8

Calculation of standard deviation of GMR Company

Date GMR Average Deviation

Squared

Deviation15-Jan-10 67.55 58.475 9.075 82.3556318-Jan-10 67.55 58.475 9.075 82.3556319-Jan-10 66.25 58.475 7.775 60.4520-Jan-10 65.05 58.475 6.575 43.23

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21-Jan-10 63.9 58.475 5.425 29.4322-Jan-10 62.8 58.475 4.325 18.70525-Jan-10 62.05 58.475 3.575 12.7827-Jan-10 59.4 58.475 0.925 0.85528-Jan-10 61.5 58.475 3.025 9.15

29-Jan-10 59.95 58.475 1.475 2.17501-Feb-10 60.9 58.475 2.425 5.8802-Feb-10 59.25 58.475 0.775 0.603-Feb-10 58.7 58.475 0.225 0.0504-Feb-10 55.2 58.475 -3.275 10.72505-Feb-10 52.6 58.475 -5.875 34.51506-Feb-10 55.45 58.475 -3.025 9.1508-Feb-10 56.15 58.475 -2.325 5.40509-Feb-10 55.5 58.475 -2.975 8.8510-Feb-10 55.35 58.475 -3.125 9.76511-Feb-10 56 58.475 -2.475 6.125

15-Feb-10 55.6 58.475 -2.875 8.26516-Feb-10 56.3 58.475 -2.175 4.7317-Feb-10 56.6 58.475 -1.875 3.51518-Feb-10 55.6 58.475 -2.875 8.26519-Feb-10 54.85 58.475 -3.625 13.1422-Feb-10 55 58.475 -3.475 12.07523-Feb-10 55.65 58.475 -2.825 7.9824-Feb-10 55.3 58.475 -3.175 10.0825-Feb-10 53.45 58.475 -5.025 25.2526-Feb-10 54.8 58.475 -3.675 13.505

X=1754.3 d2=539.36

= = 58.466

Where X = Arithmetic mean

X = Value of Variable

N = No. of items

= 18

Standard deviation = variance

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= 18

= 4.242

Calculation of standard deviation of DLF Company

Date DLF Avg deviation

Squared

deviation

15-Jan-10 386.3 323.1266667 63.17333333 3990.87004418-Jan-10 387.3 323.1267 64.1733 4118.21243319-Jan-10 379.7 323.1267 56.5733 3200.53827320-Jan-10 373.7 323.1267 50.5733 2557.65867321-Jan-10 363.55 323.1267 40.4233 1634.04318322-Jan-10 352.75 323.1267 29.6233 877.539902925-Jan-10 344.15 323.1267 21.0233 441.9791429

27-Jan-10 317.45 323.1267 -5.6767 32.2249228928-Jan-10 324.3 323.1267 1.1733 1.3766328929-Jan-10 333.65 323.1267 10.5233 110.739842901-Feb-10 332.35 323.1267 9.2233 85.0692628902-Feb-10 326.35 323.1267 3.2233 10.3896628903-Feb-10 336.1 323.1267 12.9733 168.306512904-Feb-10 321.35 323.1267 -1.7767 3.1566628905-Feb-10 308.7 323.1267 -14.4267 208.129672906-Feb-10 314.55 323.1267 -8.5767 73.5597828908-Feb-10 311.5 323.1267 -11.6267 135.180152909-Feb-10 305.95 323.1267 -17.1767 295.039022910-Feb-10 301.65 323.1267 -21.4767 461.248642911-Feb-10 307 323.1267 -16.1267 260.070452915-Feb-10 303.35 323.1267 -19.7767 391.117862916-Feb-10 309.75 323.1267 -13.3767 178.936102917-Feb-10 305.8 323.1267 -17.3267 300.214532918-Feb-10 303.7 323.1267 -19.4267 377.396672919-Feb-10 291.1 323.1267 -32.0267 1025.70951322-Feb-10 284.7 323.1267 -38.4267 1476.61127323-Feb-10 290.25 323.1267 -32.8767 1080.87740324-Feb-10 288.85 323.1267 -34.2767 1174.892163

25-Feb-10 289.5 323.1267 -33.6267 1130.75495326-Feb-10 298.45 323.1267 -24.6767 608.9395229X=9693.8 d2=26410.8

= 323.127

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N = No. of items

= 880.66


= 880.66

= 29.68

Calculation of standard deviation of TATA POWER Company

Date TATA Power Average DeviationSquareddeviation

15-Jan-10 1456.6 1301.213 155.3867 24145.0161818-Jan-10 1443.25 1301.213 142.037 20174.5093719-Jan-10 1419.15 1301.213 117.937 13909.1359720-Jan-10 1421.05 1301.213 119.837 14360.9065721-Jan-10 1356.7 1301.213 55.487 3078.80716922-Jan-10 1334.05 1301.213 32.837 1078.26856925-Jan-10 1319.45 1301.213 18.237 332.58816927-Jan-10 1311.75 1301.213 10.537 111.028369

28-Jan-10 1323.4 1301.213 22.187 492.26296929-Jan-10 1304.9 1301.213 3.687 13.59396901-Feb-10 1293.2 1301.213 -8.013 64.20816902-Feb-10 1284.1 1301.213 -17.113 292.85476903-Feb-10 1298.85 1301.213 -2.363 5.58376904-Feb-10 1277.45 1301.213 -23.763 564.68016905-Feb-10 1285.55 1301.213 -15.663 245.32956906-Feb-10 1301.95 1301.213 0.737 0.54316908-Feb-10 1284.95 1301.213 -16.263 264.48516909-Feb-10 1300.25 1301.213 -0.963 0.92736910-Feb-10 1275.1 1301.213 -26.113 681.888769

11-Feb-10 1266 1301.213 -35.213 1239.95536915-Feb-10 1239.65 1301.213 -61.563 3790.00296916-Feb-10 1236.65 1301.213 -64.563 4168.38096917-Feb-10 1262.4 1301.213 -38.813 1506.44896918-Feb-10 1252.95 1301.213 -48.263 2329.31716919-Feb-10 1240.35 1301.213 -60.863 3704.30476922-Feb-10 1254.6 1301.213 -46.613 2172.771769

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23-Feb-10 1251.75 1301.213 -49.463 2446.58836924-Feb-10 1257.85 1301.213 -43.363 1880.34976925-Feb-10 1269.35 1301.213 -31.863 1015.25076926-Feb-10 1213.15 1301.213 -88.063 7755.091969

X=39

036.4 d2=111825

= 1301.213



N = No. of items

= 3727.5


= 3727.5

= 61.05

Calculation of standard deviation of R-POWER Company

Date R-Power Average Deviation Sqr Deviation15-Jan-10 159.3 145.07333 14.22666667 202.398044418-Jan-10 159.6 145.0733 14.5267 211.025012919-Jan-10 156.75 145.0733 11.6767 136.345322920-Jan-10 156.9 145.0733 11.8267 139.870832921-Jan-10 152.95 145.0733 7.8767 62.04240289

22-Jan-10 150.5 145.0733 5.4267 29.4490728925-Jan-10 150.2 145.0733 5.1267 26.2830528927-Jan-10 145.45 145.0733 0.3767 0.1419028928-Jan-10 144.15 145.0733 -0.9233 0.8524828929-Jan-10 145.95 145.0733 0.8767 0.7686028901-Feb-10 147.5 145.0733 2.4267 5.8888728902-Feb-10 144.85 145.0733 -0.2233 0.04986289

42


43/72

03-Feb-10 148.1 145.0733 3.0267 9.1609128904-Feb-10 142.5 145.0733 -2.5733 6.6218728905-Feb-10 139.95 145.0733 -5.1233 26.2482028906-Feb-10 143.35 145.0733 -1.7233 2.9697628908-Feb-10 141.65 145.0733 -3.4233 11.71898289

09-Feb-10 142.4 145.0733 -2.6733 7.1465328910-Feb-10 140.85 145.0733 -4.2233 17.8362628911-Feb-10 141.65 145.0733 -3.4233 11.7189828915-Feb-10 141.05 145.0733 -4.0233 16.1869428916-Feb-10 142.35 145.0733 -2.7233 7.4163628917-Feb-10 142.4 145.0733 -2.6733 7.1465328918-Feb-10 141.55 145.0733 -3.5233 12.4136428919-Feb-10 139.8 145.0733 -5.2733 27.8076928922-Feb-10 139 145.0733 -6.0733 36.8849728923-Feb-10 138.85 145.0733 -6.2233 38.7294628924-Feb-10 137.75 145.0733 -7.3233 53.63072289

25-Feb-10 136.8 145.0733 -8.2733 68.4474928926-Feb-10 138.1 145.0733 -6.9733 48.62691289

X=4

352.2 d2=1225.83

= 145.07



N = No. of items

= 40.86

Standard deviation = variance= 40.86

= 6.392

43


44/72

Calculation of standard deviation of BAJAJ Company

Date BAJAJ Average Deviation Squared Deviation15-Jan-10 1726.9 1750.455 -23.555 554.83818-Jan-10 1735.7 1750.455 -14.755 217.7119-Jan-10 1776.25 1750.455 25.795 665.38220-Jan-10 1820.55 1750.455 70.095 4913.30921-Jan-10 1798.1 1750.455 47.645 2270.04622-Jan-10 1786.8 1750.455 36.345 1320.95925-Jan-10 1731.9 1750.455 -18.555 344.28827-Jan-10 1670.3 1750.455 -80.155 6424.82428-Jan-10 1683.6 1750.455 -66.855 4469.591

29-Jan-10 1747.7 1750.455 -2.755 7.59002501-Feb-10 1713.45 1750.455 -37.005 1369.3702-Feb-10 1685.2 1750.455 -65.255 4258.21503-Feb-10 1709.9 1750.455 -40.555 1644.70804-Feb-10 1683.55 1750.455 -66.905 4476.27905-Feb-10 1683.75 1750.455 -66.705 4449.55706-Feb-10 1721.3 1750.455 -29.155 850.01408-Feb-10 1699.15 1750.455 -51.305 2632.20309-Feb-10 1728.6 1750.455 -21.855 477.64110-Feb-10 1773.2 1750.455 22.745 517.33511-Feb-10 1788.75 1750.455 38.295 1466.50715-Feb-10 1792.65 1750.455 42.195 1780.418

16-Feb-10 1797.5 1750.455 47.045 2213.23217-Feb-10 1839.15 1750.455 88.695 7866.80318-Feb-10 1812.5 1750.455 62.045 3849.58219-Feb-10 1806.6 1750.455 56.145 3152.26122-Feb-10 1801.35 1750.455 50.895 2590.30123-Feb-10 1721.8 1750.455 -28.655 821.10924-Feb-10 1747.45 1750.455 -3.005 9.03002525-Feb-10 1712.35 1750.455 -38.105 1451.99126-Feb-10 1817.65 1750.455 67.195 4515.168

X=525

13.65 d2=71580.26

= 1750.455



44


45/72

N = No. of items

= 2386


= 2386

= 48.84

Calculation of standard deviation of HERO HONDA Company

Date HEROHONDA Average Deviation Squared Deviation15-Jan-10 1625.35 1643.837 -18.487 341.769218-Jan-10 1694.6 1643.837 50.763 2576.882

19-Jan-10 1664.1 1643.837 20.263 410.589220-Jan-10 1688.65 1643.837 44.813 2008.20521-Jan-10 1653.2 1643.837 9.363 87.6657722-Jan-10 1649.4 1643.837 5.563 30.9469725-Jan-10 1621.45 1643.837 -22.387 501.177827-Jan-10 1550.15 1643.837 -93.687 8777.25428-Jan-10 1539.1 1643.837 -104.737 10969.8429-Jan-10 1559 1643.837 -84.837 7197.31701-Feb-10 1580.95 1643.837 -62.887 3954.77502-Feb-10 1568.45 1643.837 -75.387 5683.203-Feb-10 1599.6 1643.837 -44.237 1956.91204-Feb-10 1600.45 1643.837 -43.387 1882.43205-Feb-10 1585.4 1643.837 -58.437 3414.88306-Feb-10 1584.35 1643.837 -59.487 3538.70308-Feb-10 1578.25 1643.837 -65.587 4301.65509-Feb-10 1618.3 1643.837 -25.537 652.138410-Feb-10 1630.65 1643.837 -13.187 173.89711-Feb-10 1690.95 1643.837 47.113 2219.63515-Feb-10 1704.35 1643.837 60.513 3661.82316-Feb-10 1695.4 1643.837 51.563 2658.74317-Feb-10 1698.4 1643.837 54.563 2977.12118-Feb-10 1703 1643.837 59.163 3500.26119-Feb-10 1680.35 1643.837 36.513 1333.199

22-Feb-10 1707.25 1643.837 63.413 4021.20923-Feb-10 1693.85 1643.837 50.013 2501.324-Feb-10 1672.25 1643.837 28.413 807.298625-Feb-10 1700.25 1643.837 56.413 3182.42726-Feb-10 1777.65 1643.837 133.813 17905.92

X=493

15.1 d2=103229.2

45


46/72

= 1643.837



N = No. of items

= 3441


= 3441

= 58.65Calculation of standard deviation of MTNL Company

Date MTNL Average Deviation Squared Deviation15-Jan-10 88.05 76.49333 11.55667 133.556618-Jan-10 90.05 76.49333 13.55667 183.783319-Jan-10 89.25 76.49333 12.75667 162.732620-Jan-10 86.45 76.49333 9.95667 99.1352821-Jan-10 84.95 76.49333 8.45667 71.5152722-Jan-10 82.7 76.49333 6.20667 38.52275

25-Jan-10 82.3 76.49333 5.80667 33.7174227-Jan-10 77.95 76.49333 1.45667 2.12188728-Jan-10 75.55 76.49333 -0.94333 0.88987129-Jan-10 75.8 76.49333 -0.69333 0.48070601-Feb-10 74.75 76.49333 -1.74333 3.03919902-Feb-10 72.4 76.49333 -4.09333 16.7553503-Feb-10 73.7 76.49333 -2.79333 7.80269204-Feb-10 72.1 76.49333 -4.39333 19.3013505-Feb-10 71 76.49333 -5.49333 30.1766706-Feb-10 71.75 76.49333 -4.74333 22.4991808-Feb-10 73.05 76.49333 -3.44333 11.8565209-Feb-10 74.15 76.49333 -2.34333 5.49119510-Feb-10 72.3 76.49333 -4.19333 17.5840211-Feb-10 73.25 76.49333 -3.24333 10.5191915-Feb-10 71.7 76.49333 -4.79333 22.9760116-Feb-10 72.65 76.49333 -3.84333 14.7711917-Feb-10 75.15 76.49333 -1.34333 1.80453518-Feb-10 74.9 76.49333 -1.59333 2.538719-Feb-10 75.7 76.49333 -0.79333 0.62937222-Feb-10 74.6 76.49333 -1.89333 3.584698

46


47/72

23-Feb-10 73.45 76.49333 -3.04333 9.26185724-Feb-10 71.95 76.49333 -4.54333 20.6418525-Feb-10 71.35 76.49333 -5.14333 26.4538426-Feb-10 71.85 76.49333 -4.64333 21.56051

X=229

4.8 d2

=995.7

=76.493



N = No. of items

=33.19


= 33.19

= 5.76

Calculation of standard deviation of BHARTI AIRTEL Company

Date Bharti Airtel Average Deviation Squared Deviation15-Jan-10 317.4 302.595 14.805 219.18818-Jan-10 320.7 302.595 18.105 327.79119-Jan-10 320.55 302.595 17.955 322.38220-Jan-10 331.5 302.595 28.905 835.49921-Jan-10 322.4 302.595 19.805 392.238

47


48/72

22-Jan-10 322.15 302.595 19.555 382.39825-Jan-10 330.9 302.595 28.305 801.17327-Jan-10 322.9 302.595 20.305 412.29328-Jan-10 313.65 302.595 11.055 122.21329-Jan-10 306.4 302.595 3.805 14.4780201-Feb-10 311.2 302.595 8.605 74.0460202-Feb-10 307.65 302.595 5.055 25.5530203-Feb-10 309 302.595 6.405 41.0240204-Feb-10 304.1 302.595 1.505 2.26502505-Feb-10 300.05 302.595 -2.545 6.47702506-Feb-10 300.4 302.595 -2.195 4.81802508-Feb-10 308.35 302.595 5.755 33.1200209-Feb-10 313.15 302.595 10.555 111.40810-Feb-10 315.3 302.595 12.705 161.41711-Feb-10 314.5 302.595 11.905 141.72915-Feb-10 285.6 302.595 -16.995 288.8316-Feb-10 271.6 302.595 -30.995 960.69

17-Feb-10 279.15 302.595 -23.445 549.66818-Feb-10 281.9 302.595 -20.695 428.28319-Feb-10 278.8 302.595 -23.795 566.20222-Feb-10 276.9 302.595 -25.695 660.23323-Feb-10 280.1 302.595 -22.495 506.02524-Feb-10 275.95 302.595 -26.645 709.95625-Feb-10 276.25 302.595 -26.345 694.05926-Feb-10 279.35 302.595 -23.245 540.33

X=907

7.85 d2=10335.79

= 302.595



N = No. of items

= 344.52


= 344.52

= 18.56

Calculation of standard deviation of INFOSYS Company

Date INFOSYS Average Deviation Squared Deviation

48


49/72

15-Jan-10 2675.8 2526.903333 148.8967 22170.2218-Jan-10 2686.65 2526.903333 159.7467 2551919-Jan-10 2635.9 2526.903333 108.9967 11880.2720-Jan-10 2657.7 2526.903333 130.7967 17107.7721-Jan-10 2625.2 2526.903333 98.29667 9662.23522-Jan-10 2575.6 2526.903333 48.69667 2371.36525-Jan-10 2542.3 2526.903333 15.39667 237.057427-Jan-10 2502.25 2526.903333 -24.6533 607.786828-Jan-10 2491.75 2526.903333 -35.1533 1235.75729-Jan-10 2475.5 2526.903333 -51.4033 2642.30301-Feb-10 2451.25 2526.903333 -75.6533 5723.42702-Feb-10 2439.95 2526.903333 -86.9533 7560.88203-Feb-10 2473.2 2526.903333 -53.7033 2884.04804-Feb-10 2429.05 2526.903333 -97.8533 9575.27505-Feb-10 2352.7 2526.903333 -174.203 30346.806-Feb-10 2379.45 2526.903333 -147.453 21742.4908-Feb-10 2403.6 2526.903333 -123.303 15203.71

09-Feb-10 2473.8 2526.903333 -53.1033 2819.96410-Feb-10 2466.95 2526.903333 -59.9533 3594.40211-Feb-10 2498.45 2526.903333 -28.4533 809.592215-Feb-10 2498.65 2526.903333 -28.2533 798.250816-Feb-10 2541.45 2526.903333 14.54667 211.605517-Feb-10 2518.65 2526.903333 -8.25333 68.1175118-Feb-10 2533.65 2526.903333 6.746667 45.5175219-Feb-10 2532.4 2526.903333 5.496667 30.2133522-Feb-10 2568.35 2526.903333 41.44667 1717.82623-Feb-10 2581.3 2526.903333 54.39667 2958.99724-Feb-10 2576.3 2526.903333 49.39667 2440.03125-Feb-10 2617.35 2526.903333 90.44667 8180.6

26-Feb-10 2601.95 2526.903333 75.04667 5632.002X=75807.1 d2=215777.5

= 2526.904


X = Value of VariableN = No. of items

= 7192.58


49


50/72

= 7192.58

= 84.81

Calculation of standard deviation of TCS Company

Date TCS Average Deviation Squared Deviation15-Jan-10 791.4 753.6133 37.78667 1427.83218-Jan-10 802.2 753.6133 48.5867 2360.66719-Jan-10 780.7 753.6133 27.0867 733.689320-Jan-10 779.4 753.6133 25.7867 664.953921-Jan-10 770.65 753.6133 17.0367 290.249122-Jan-10 757.85 753.6133 4.2367 17.9496325-Jan-10 756.2 753.6133 2.5867 6.69101727-Jan-10 743.3 753.6133 -10.3133 106.364228-Jan-10 741.75 753.6133 -11.8633 140.737929-Jan-10 736.2 753.6133 -17.4133 303.22301-Feb-10 746.15 753.6133 -7.4633 55.7008502-Feb-10 738.4 753.6133 -15.2133 231.444503-Feb-10 752.95 753.6133 -0.6633 0.43996704-Feb-10 738.7 753.6133 -14.9133 222.406505-Feb-10 723.5 753.6133 -30.1133 906.810806-Feb-10 729.7 753.6133 -23.9133 571.845908-Feb-10 724.15 753.6133 -29.4633 868.08609-Feb-10 735.15 753.6133 -18.4633 340.893410-Feb-10 732.3 753.6133 -21.3133 454.256811-Feb-10 742.7 753.6133 -10.9133 119.100115-Feb-10 746.15 753.6133 -7.4633 55.70085

16-Feb-10 758.15 753.6133 4.5367 20.5816517-Feb-10 758.65 753.6133 5.0367 25.3683518-Feb-10 758.8 753.6133 5.1867 26.9018619-Feb-10 750.55 753.6133 -3.0633 9.38380722-Feb-10 757.25 753.6133 3.6367 13.2255923-Feb-10 762.1 753.6133 8.4867 72.0240824-Feb-10 765.35 753.6133 11.7367 137.750125-Feb-10 766.25 753.6133 12.6367 159.686226-Feb-10 761.8 753.6133 8.1867 67.02206

X=226

08.4 10411

= 753.613



50


51/72

N = No. of items

= 347


= 347

= 18.62

Correlation between TCS and INFOSYS

Date Deviation of TCS (X) Deviation of

INFOSYS (Y)

Product Deviation

15-Jan-10 37.78667 148.8967 5626.31046718-Jan-10 48.5867 159.7467 7761.56498919-Jan-10 27.0867 108.9967 2952.36091420-Jan-10 25.7867 130.7967 3372.81526421-Jan-10 17.0367 98.29667 1674.65087822-Jan-10 4.2367 48.69667 206.313181825-Jan-10 2.5867 15.39667 39.8265662927-Jan-10 -10.3133 -24.6533 254.256878928-Jan-10 -11.8633 -35.1533 417.034143929-Jan-10 -17.4133 -51.4033 895.101083901-Feb-10 -7.4633 -75.6533 564.623273902-Feb-10 -15.2133 -86.9533 1322.846639

03-Feb-10 -0.6633 -53.7033 35.6213988904-Feb-10 -14.9133 -97.8533 1459.31561905-Feb-10 -30.1133 -174.203 5245.827206-Feb-10 -23.9133 -147.453 3526.08782508-Feb-10 -29.4633 -123.303 3632.9132809-Feb-10 -18.4633 -53.1033 980.462158910-Feb-10 -21.3133 -59.9533 1277.80266911-Feb-10 -10.9133 -28.4533 310.519398915-Feb-10 -7.4633 -28.2533 210.862853916-Feb-10 4.5367 14.54667 65.9938777917-Feb-10 5.0367 -8.25333 -41.569547218-Feb-10 5.1867 6.746667 34.9929377319-Feb-10 -3.0633 5.496667 -16.8379422-Feb-10 3.6367 41.44667 150.729104823-Feb-10 8.4867 54.39667 461.648219324-Feb-10 11.7367 49.39667 579.753896825-Feb-10 12.6367 90.44667 1142.94743526-Feb-10 8.1867 75.04667 614.3845733

dxdy=44759.15924

51


52/72

Co-Variance (COVxy) = (1/n) dxdy

= (1/30)(44759.15924)

=1492

= 0.954

Correlation between BHARTI-AIRTEL and MTNL

Date Deviation of BHARTI Deviation of MTNL Product Deviation15-Jan-10 14.805 11.55667 171.096499418-Jan-10 18.105 13.55667 245.443510419-Jan-10 17.955 12.75667 229.046009920-Jan-10 28.905 9.95667 287.797546421-Jan-10 19.805 8.45667 167.484349422-Jan-10 19.555 6.20667 121.371431925-Jan-10 28.305 5.80667 164.357794427-Jan-10 20.305 1.45667 29.5776843528-Jan-10 11.055 -0.94333 -10.4285131529-Jan-10 3.805 -0.69333 -2.6381206501-Feb-10 8.605 -1.74333 -15.0013546502-Feb-10 5.055 -4.09333 -20.6917831503-Feb-10 6.405 -2.79333 -17.8912786504-Feb-10 1.505 -4.39333 -6.61196165

05-Feb-10 -2.545 -5.49333 13.9805248506-Feb-10 -2.195 -4.74333 10.4116093508-Feb-10 5.755 -3.44333 -19.8163641509-Feb-10 10.555 -2.34333 -24.7338481510-Feb-10 12.705 -4.19333 -53.2762576511-Feb-10 11.905 -3.24333 -38.6118436515-Feb-10 -16.995 -4.79333 81.4626433516-Feb-10 -30.995 -3.84333 119.124013417-Feb-10 -23.445 -1.34333 31.4943718518-Feb-10 -20.695 -1.59333 32.9739643519-Feb-10 -23.795 -0.79333 18.8772873522-Feb-10 -25.695 -1.89333 48.64911435

23-Feb-10 -22.495 -3.04333 68.4597083524-Feb-10 -26.645 -4.54333 121.057027925-Feb-10 -26.345 -5.14333 135.501028926-Feb-10 -23.245 -4.64333 107.9342059

dxdy=1996.399

Co-Variance (COVxy) = (1/n)dxdy

52


53/72

= (1/30) (1996.399)

= 665.4

= 6.168

Correlation between BAJAJ and HERO HONDA

Date Deviation of BAJAJ Deviation of

HEROHONDA

Product Deviation

15-Jan-10 -23.555 -18.487 435.46128518-Jan-10 -14.755 50.763 -749.00806519-Jan-10 25.795 20.263 522.68408520-Jan-10 70.095 44.813 3141.16723521-Jan-10 47.645 9.363 446.10013522-Jan-10 36.345 5.563 202.18723525-Jan-10 -18.555 -22.387 415.39078527-Jan-10 -80.155 -93.687 7509.48148528-Jan-10 -66.855 -104.737 7002.19213529-Jan-10 -2.755 -84.837 233.725935

01-Feb-10 -37.005 -62.887 2327.13343502-Feb-10 -65.255 -75.387 4919.37868503-Feb-10 -40.555 -44.237 1794.03153504-Feb-10 -66.905 -43.387 2902.80723505-Feb-10 -66.705 -58.437 3898.04008506-Feb-10 -29.155 -59.487 1734.34348508-Feb-10 -51.305 -65.587 3364.94103509-Feb-10 -21.855 -25.537 558.11113510-Feb-10 22.745 -13.187 -299.93831511-Feb-10 38.295 47.113 1804.19233515-Feb-10 42.195 60.513 2553.346035

16-Feb-10 47.045 51.563 2425.78133517-Feb-10 88.695 54.563 4839.46528518-Feb-10 62.045 59.163 3670.76833519-Feb-10 56.145 36.513 2050.02238522-Feb-10 50.895 63.413 3227.40463523-Feb-10 -28.655 50.013 -1433.12251524-Feb-10 -3.005 28.413 -85.38106525-Feb-10 -38.105 56.413 -2149.61736526-Feb-10 67.195 133.813 8991.564535

53


54/72

dxdy=66252.6545


= (1/30) (66252.6545)

=22082

= 7.709

Correlation between R-POWER and TATA POWERDate Deviation of R-

POWER

Deviation of TATA Product Deviation

15-Jan-10 14.22666667 155.3867 2210.63478618-Jan-10 14.5267 142.037 2063.32888819-Jan-10 11.6767 117.937 1377.11496820-Jan-10 11.8267 119.837 1417.27624821-Jan-10 7.8767 55.487 437.054452922-Jan-10 5.4267 32.837 178.196547925-Jan-10 5.1267 18.237 93.4956279

27-Jan-10 0.3767 10.537 3.969287928-Jan-10 -0.9233 22.187 -20.485257129-Jan-10 0.8767 3.687 3.232392901-Feb-10 2.4267 -8.013 -19.445147102-Feb-10 -0.2233 -17.113 3.821332903-Feb-10 3.0267 -2.363 -7.152092104-Feb-10 -2.5733 -23.763 61.149327905-Feb-10 -5.1233 -15.663 80.246247906-Feb-10 -1.7233 0.737 -1.270072108-Feb-10 -3.4233 -16.263 55.673127909-Feb-10 -2.6733 -0.963 2.574387910-Feb-10 -4.2233 -26.113 110.283032911-Feb-10 -3.4233 -35.213 120.544662915-Feb-10 -4.0233 -61.563 247.686417916-Feb-10 -2.7233 -64.563 175.824417917-Feb-10 -2.6733 -38.813 103.758792918-Feb-10 -3.5233 -48.263 170.045027919-Feb-10 -5.2733 -60.863 320.948857922-Feb-10 -6.0733 -46.613 283.094732923-Feb-10 -6.2233 -49.463 307.8230879

54


55/72

24-Feb-10 -7.3233 -43.363 317.560257925-Feb-10 -8.2733 -31.863 263.612157926-Feb-10 -6.9733 -88.063 614.0897179

dxdy=10974.68622


= (1/30)(10974.69)

= 3657.9

= 9.37

Correlation between GMR and DLF

Date Deviation of GMR Deviation of DLF Product Deviation15-Jan-10 9.075 63.17333333 573.29818-Jan-10 9.075 64.1733 582.372697519-Jan-10 7.775 56.5733 439.8574075

55


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20-Jan-10 6.575 50.5733 332.519447521-Jan-10 5.425 40.4233 219.296402522-Jan-10 4.325 29.6233 128.120772525-Jan-10 3.575 21.0233 75.158297527-Jan-10 0.925 -5.6767 -5.250947528-Jan-10 3.025 1.1733 3.549232529-Jan-10 1.475 10.5233 15.521867501-Feb-10 2.425 9.2233 22.366502502-Feb-10 0.775 3.2233 2.498057503-Feb-10 0.225 12.9733 2.918992504-Feb-10 -3.275 -1.7767 5.818692505-Feb-10 -5.875 -14.4267 84.756862506-Feb-10 -3.025 -8.5767 25.944517508-Feb-10 -2.325 -11.6267 27.032077509-Feb-10 -2.975 -17.1767 51.100682510-Feb-10 -3.125 -21.4767 67.114687511-Feb-10 -2.475 -16.1267 39.9135825

15-Feb-10 -2.875 -19.7767 56.858012516-Feb-10 -2.175 -13.3767 29.094322517-Feb-10 -1.875 -17.3267 32.487562518-Feb-10 -2.875 -19.4267 55.851762519-Feb-10 -3.625 -32.0267 116.096787522-Feb-10 -3.475 -38.4267 133.532782523-Feb-10 -2.825 -32.8767 92.876677524-Feb-10 -3.175 -34.2767 108.828522525-Feb-10 -5.025 -33.6267 168.974167526-Feb-10 -3.675 -24.6767 90.6868725

dxdy=3579.195

Co-Variance (COVxy) = (1/n) dxdy

= (1/30)(3579.195)

= 1192.947

=9.473

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Portfolio Weight GMR AND DLF

Deriving the Minimum risk portfolio the following formula is used

(b)2 rab (a) (b)

Xa =

(a)2 + (b)2 2(rab)(a)(b)

Where Xa is proportion of GMR

Xb is proportion of DLF

a is standard deviation of GMR

b is standard deviation of DLF

(29.68)2 (9.473)(4.242)(29.68)

Xa =

(4.242)2 + (29.68)2 2(9.473)(4.242)(29.68)

880.9 1192.67

=17.99 + 880.9 2385.34

-311.77

=

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-1486.45

= 0.21

Xa = 0.21

Xb = 1 Xa

Xb = 1 ( 0.21)

Xb = 1 -0.21

Xb = 0.79

Portfolio Weight R-POWER AND TATA POWER


(b)2 rab (a) (b)

Xa =

(a)2 + (b)2 2(rab)(a)(b)

Where Xa is proportion of R-POWER

Xb is proportion of TATA POWER

a is standard deviation of R-POWER

b is standard deviation of TATA POWER

(61.05)2 (9.37)(6.392)(61.05)

Xa =

(6.392)2 + (61.05)2 2(9.37)(6.392)(61.05)

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3727.10 3656.47

=

40.85 +3727.10 7312.94

70.63

=

- 3544.99

= - 0.02

Xa = - 0.02

Xb = 1 Xa

Xb = 1 (-0.02)

Xb = 1 + 0.02

Xb = 1.02

Portfolio Weight BAJAJ AND HERO HONDA


(b)2 rab (a) (b)

Xa =

(a)2 + (b)2 2(rab)(a)(b)

Where Xa is proportion of BAJAJ

Xb is proportion of HERO HONDA

a is standard deviation of BAJAJ

b is standard deviation of HERO HONDA

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(58.65)2 (7.709)(48.84)(58.65)

Xa =

(48.84)2 + (58.65)2 2(7.709)(48.84)(58.65)

3439.8 22082.17

=

2385.34 +3439.8 44164.3

-18642.37=

-38339.16

= 0.49

Xa = 0.49

Xb = 1 Xa

Xb = 1 (0.49)

Xb = 1 + 0.49

Xb = 1.49

Portfolio Weight BHARTI AND MTNL


(b) 2 rab (a) (b)

Xa =

(a)2 + (b)2 2(rab)(a)(b)

Where Xa is proportion of BHARTI

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7/29/2019 My Irs Pr

My Irs Prjct

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