“A STUDY ON RISK AND RETURNS

CONSIDERATION IN PORTFOLIO
MANAGEMENT AND INVESTMENTS”
IN
IIFL
A Project report submitted to
Jawaharlal Nehru Technological University, Kakinada
In the partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
B.SRINIVASULU
M.B.A. (2019-2020)
Regd No. 19HJ1E0075

Under The Guidance of

G.CHIRANJEEVI M.B.A.
Associate Professor
Dept. of Business Administration

ABR COLLEGE OF ENGINEERING AND TECHNOLOGY

(Affiliated to Jawaharlal Nehru Technological University, Kakinada)
CHINA IRLAPADU (V), KANIGIRI (M), PRAKASAM (Dt), PIN - 523234
ANDHRA PRADESH
(2019-2020)

1
 DECLARATION
I hereby declare that this project report entitled “A STUDY ON RISK
AND RETURNS CONSIDERATION IN PORTFOLIO MANAGEMENT
AND INVESTMENTS AT IIFL” has been prepared by me under the guidance
of Ms. M. THIRUPATHAMMA, MBA during the Academic Year 2018-2020 in
the partial fulfillment for the requirement of the degree of MASTER OF
BUSINESS ADMINISTRATION.

I also declare that his project work is the result of my own effort and that it
has not been submitted to any other University for the award of any degree or
diploma.

Place:
Date:
(B. SRINIVASULU)
(18HJ1E0075)

2
 DEPARTMENT OF BUSINESS ADMINISTRATION

CERTIFICATE

This is to certify that this project report entitled “ A STUDY

ON RISK AND RETURNS CONSIDERATION IN PORTFOLIO
MANAGEMENT AND INVESTMENTS AT IIFL” is a bonified work
done by B. SRINIVASULU (Registration No. 18HJ1E0075), under my
guidance and supervision and is submitted in partial fulfillment of
requirements for the award of the degree of MASTER OF BUSINESS
AEDMINISTRATION by Jawaharlal Nehru Technological
Univeristy, Kakinada during the academic year 2018-2020.

G. CHIRANJEEVI S. MURALI
M.B.A M.B.A.
(Internal Guide) Head of the Department
Dept. of Business Administration

EXTERNAL EXAMINER

3
4
 ACKNOWLEDGEMENT
I would like to thank my project guide Mr.G.CHIRANJEEVI,M.B.A for his
guidance and the help throughout the development of this project work by providing us
with required information. Without his guidance, cooperation and encouragement, I
could not learn many new things during my project tenure.
I would like to thank Mr. S. MURALI, M.B.A. Head of the Deportment of
Master of Business Administration for his encouragement and valuable guidance in
bringing shape to this dissertation.
I convey my sincere thank to Dr. M.JANARDHAN, principal for his valuable
cooperation throughout the project duration.
I take immense pleasure in conveying my sincere and warm thanks to our
correspondent Mr. A.BASI REDDY whose unfailing enthusiasm and aspiring guidance
motivated me to this performance.
I convey my sincere thank to all teaching and not teaching staff of Master of
Business Administration deportment, my friends and well wishers for their kind
cooperation and timely who helped in every step of my project work.

(B.SRINIVASULU)

5
CHAPTER-I
INTRODUCTION

6
 INTRODUCTION

A portfolio is a gathering of securities held together as speculation. Financial

specialists put their funds in an arrangement of securities as opposed to in a solitary
security since they are chance unwilling. By building a portfolio, financial specialists
endeavors to spread hazard by not putting every one of their eggs into one crate.
Portfolio period of portfolio the board comprises of distinguishing the scope of
conceivable portfolios that can be established from a given arrangement of securities and
computing their arrival and hazard for further analysis.
Portfolio Management
Portfolio Management is a procedure incorporating numerous exercises of Investment in
resource and securities. It is a dynamic and adaptable idea and includes persistent and
efficient analysis, judgment and activities.

The target of this administration is to encourage the learners and uninitiated financial
specialists with expertise of experts in portfolio the board. Right off the bat, it includes
development of a portfolio dependent on the reality sheet of the financial specialist
giving out his goals, imperatives, inclinations for hazard and return and his assessment
risk. Besides, the portfolio is assessed and balanced every once in a while tuned in to
economic situations.

The alteration is done through changes in the weighting example of the securities and
resource classes in the portfolio. Thirdly, the assessment of portfolio execution is to be
finished by the supervisor in terms of targets set for hazard and return and changes in the
portfolio are to be influenced to meet the evolving conditions.

The accumulation of information on the financial specialists inclinations, targets and so

forth., is the establishment of portfolio the board. This gives a thought of directs of
Investment in terms of benefit classes to be chosen and securities to be picked dependent
on the liquidity prerequisites, time skyline, charges resource inclinations of financial
specialists and so forth. These are building obstructs for development of a portfolio.

7
 OBJECTIVES OF STUDY

OBJECTIVES

• Separate study on Portfolio Management.

• To study in detail the Role of Securities.
• To take choices of the holder with respect to chance return and a large group of
other
Contemplations.
• To measure the hazard and return of a portfolio utilizing Morkowitz Model and
capital evaluating Model.
• To select an ideal portfolio.
• To know the execution of portfolio.

8
 NEED FOR THE STUDY

Speculation is the forfeit of certain present an incentive for the questionable future
reward. It involves touching base at various choices such sort, blend sum, timing, review,
and so on of venture and disinvestments. Further such basic leadership has not
exclusively to be persistent yet sane apparatus. Extensively a venture choice kis
exchange of among hazard and return. All venture choices are exchange of with the
individual speculation closes and in examination of unsure future. Since interest in
securities are revocable speculations closes are transient and venture condition is liquid,
the dependable bases for contemplated desires turn out to be increasingly more ue as one
imagines the removed future. Speculators in securities will subsequently, shape thime to
time reappraise and rethink their different venture responsibilities in the light of new data
changed desires and finishes

Speculation decision or choices are observed to be the out happened to three distinctive
however related classes of components. The first might be depicted as true or instructive
premises. The authentic premises of speculation choices are given by numerous surges of
information which taken together speak to a financial specialist the perceptible
environmentr and general just as specific highlights of securities and firms in which he
may contribute. The below average of variables going into venture choices may
portrayed as expectational premises. Desires identifying with the results of elective
speculations are emotional and theoretical regardless yet their establishments are
fundamentally given by the environmentl and financial realities accessible to speculators.
These limit not just the scope of speculations which may embrace yet in addition the
desires for results which may authentically be engaged. The third and last class of
components might be depicted as valuation premises. For financial specialists by and
large these contain the structure of subnjective inclinations for size and consistency of
the salary to be gotten from and for the security and debatability of explicit speculations
or blends of ventures as these are informed every once in a while.

In the plan of a program for putting cash in various securities or assignment of funds in a
proficient portfolio we have to study the procedure of portfolio the board and speculation
choices.

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 SCOPE OF STUDY

Extent of the venture is to study and think about Portfolio Management and speculation
choices and help in choice of right portfolio. The "Markowitz Model" was splendid
inno¬¬¬vation by Harry Markowitz in the art of portfolio choice however Portfolio
Managers regrains from utilizing the Markowitz show because of the extensive number
of the scientific estimations that are included.

This task makes a working model to create set productive portfolios called effective
boondocks by making the utilization of Markowitz display with the assistance of PC
innovation. It additionally creates the effective wilderness for portfolio comprising ten
organization securities.

There is a substantial degree for the financial specialist to learn and put their funds in
those securities which have more returns and less hazard.

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 RESEARCH METHODOLGY

The wellspring of information taken for portfolio analysis is auxiliary in nature which
incorporates both the inside and the outside information sources. Inward information was
gathered from the organization's yearly reports and records. Outside information sources
incorporate the published books, for example, on fund and sites, diaries, news papers,
books and so on..,

Test size of the organizations: 10

The analysis of hazard and return was done to know Diversification of portfolio utilizing
Standard Deviation and Co-difference.
METHOD OF CALCULATION:

Standard deviation and co-fluctuation for organizations are determined utilizing the
recipe of Markowitz model and capital resource estimating model.

11
 CHAPTER-II
REVIEW OF LITERATURE

12
 REVIEW OF LITERATURE

PORTFOLIO

A Portfolio Is Collection Of Securities it once in a while attractive to contribute the

whole funds of a person in a solitary security it is basic that each security be seen in
portfolio setting in this way it appears to be legitimate that the normal profit for a
portfolio ought to rely upon the normal return of every one of the security contained in
the portfolio.

Portfolio analysis considers the determination of future hazard and return in holding
different mixes of individual securities portfolio expected return is a load normal of the
normal return of individual securities yet portfolio difference in short complexity can be
dregs than a weighted normal of security fluctuation accordingly a financial specialist
can some of the time in the portfolio this to in light of the fact that chance depends
significantly on the co-change among returns of individual securities. Portfolios which
are blends of securities might possibly go up against the total qualities of their individual
parts.

Since portfolio's normal return is a weighted normal of the normal returns of its
Securities the commitment of every security to theportfolios expected returns depends
On its normal returnd and its proportionate offer of the underlying kportfolios showcase
esteem it pursues that a speculator who essentially needs the best conceivable expected
return should one security; the one which is considered to have a biggest expected return
not many financial specialists do this and not many ventures counselors would advice
such an outrageous policy rather financial specialist ought to broaden meaning their
portfolio ought to incorporate more than one security.

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 ELEMENTS OF PORTFOLIO MANAGEMENT
Portfolio Management is on going procedure including the accompanying fundamental
errands:

1. Identification of the financial specialist's goals, and inclinations.

2. Strategies are be created and actualized thusly with speculation policy detailed.

3. Review and checking of the execution of the portfolio.

4. Finally the assessment of the portfolio.

RISK

Hazard in vulnerability of the pay/capital valuation for loss of both. All ventures are
dangerous. The higher the hazard taken the higher is the arrival. In any case, legitimate
administration of hazard includes the correct selection of ventures whose dangers are
redressing. The complete danger of two organizations if their dangers are
counterbalanced by one another.

The two noteworthy sorts of dangers are Systematic or Market related dangers and
unsystematic or organization related dangers. The Systematic dangers are the market
issues, crude material accessibility, impose policy or any Govt. policy intrigue hazard,
and financial hazard.

The unsystematic dangers are fumble, expanding stock, wrong financial policy, faulty
promoting and so forth.

The organization explicit dangers (unsystematic dangers) can be diminished by

broadening into a couple of organizations having a place with different industry
gatherings, resource gatherings or distinctive sorts of instruments like value shares,
bonds debentures and so forth in this way resource classes are bank stores, organization
stores, gold, silver, arrive, land, value shares and so forth. industry bunches are tea,
sugar, paper, concrete, steel, power, hardware, PC programming and so forth every one
of them has distinctive hazard return qualities and speculation are made dependent on
person's inclinations. The second class of hazard (efficient hazard) is overseen by the
utilization of Beta of various organization shares.

14
RETURN OF PORTFOLIO

Every security in a portfolio contributes returns in the extent of its interest in

security. Along these lines the portfolio expected return is the weighted normal of the
normal returns, frame every one of the securities, with loads speaking to the
proportionate offer of the security in the absolute venture. For what reason does a
speculator have numerous securities in his portfolio? On the off chance that the security
ABC gives the most extreme return why not he/she puts resources into that securities all
his/her funds and consequently expand return? The solution to his inquiry lies in the
speculator's view of hazard joined to ventures, his destinations of salary security
gratefulness, liquidity advertisement fence against the loss of estimation of cash and so
on this example of interest in various classifications security classes kinds of
instruments, and so forth. would all be portrayed under the subtitle of enhancement,
which goes for he decrease or even disposal of non-orderly or organization related
dangers and accomplish the particular destinations of financial specialists.
PORTFOLIO RISK:

Hazard on a portfolio is unique in relation to the hazard on individual securities. This

hazard is reflected in the fluctuation of the profits from zero to interminability. The
normal profit depends for the likelihood of the profits and their weighted commitment to
the danger of the portfolio. There are two proportions of hazard in this specific situation;
one is the outright and the other standard deviation.

Most financial specialists put resources into an arrangement of advantages, as they would
prefer not to put every one of their eggs in on bushel. Henceforth, what truly matter to
them isn't the hazard and return of stocks in segregation, yet the hazard and return of the
portfolio in general.

15
RISK-RETURN ANALYSIS:
All ventures have a few risks. Interest in offers of organizations of organizations
has its own risks or vulnerability. These risks emerge out of fluctuation of profits or
yields and vulnerability of thankfulness or deterioration of energy about devaluation of
offer costs, loss of liquidity and so on. The risk after some time taxi be spoken to by the
difference of the profits, while the arrival over the long haul is capital thankfulness in
addition to payout, partitioned by the buy costs of the offer.
Y

SML (SECURITY
MARKET LINE

VARIABLE RETURN

} RISK FREE RETURN

X
RISK
O
Regularly, the higher risk that the financial specialist takes the higher is the arrival.
There is

In any case, a risk less profit for capital of about 12% which is the band rate charged by
the R.B.I. or then again long haul yielded on government securities at around 13%with to
14%. This risk less return alludes to absence of changeability of return and no
vulnerability in the reimbursement of capital. In any case, different risks, for example,
loss of liquidity because of separating with cash and so on., may anyway remain yet are
granted by the complete profit for the capital.

Risk-return is liable to variety and the goal of the portfolio director is to diminish that
changeability and subsequently lessen the risky by picking a fitting portfolio.

16
There are two types of risks, namely:
A) Market risk of systematic risk
B) Company risk or un systematic risk

The unsystematic risk can be diminished by differentiating the arrangement of contents

up to an ideal dimension of around 19 shares. These contents should be chosen to the
point that the risks on every one of them are assorted and their changeability of return is
likewise extraordinary. By putting resources into such a various arrangement of contents,
the all out risk can be decreased as some of them of them may have positive and other
negative co-fluctuation and thaey may change in the level of risk also.

Expanding into a bin of contents can bring down the unsystematic risk. In this way, a
level of expansion of venture of speculation is an important pre-essential of portfolio the
board and for lessening the risk

In the administration of a portfolio, the issue of risk the executives is crucial. Given the
individual inclination of portfolio holders, the portfolio is to be developed in such a way,
to the point that its presentation to the market related risks can't be diminished the
organization related risks can be disposed of intensive a legitimate enhancement into
around 19 contents of various gatherings of enterprises and organizations would
probably decrease the organization related risks included nearly to irrelevant extent. An
ideal level of expansion can be anchored which would limit risk and advance return, if
the covariance of contents incorporate into the portfolio is under 1 or negative.

The coefficient of connection is likewise intended to gauge the connection between two
securities. IT gives a sign of the factors being emphatically identified with one another.
On the off chance that the coefficient of relationship is zero, it implies that the profits on
securities are free of each other. At the point when relationship coefficient is 1. the
portfolio risk will be the base.

PORTFOLIO DIVERSIFICATION
A blend of securities that have risk and return highlights make up a portfolio.

Portfolio could conceivably on total qualities of individual certainties.

• Porfolio analysis goes out on a limb factors for every industry and thinks about
the blended impact of joined securities.

• Portfolio choice includes picking the best portfolio to suit the risk return
inclinations of the portfolio financial specialists.

• Management of portfolio is a dynamic action of assessing and the reconsidering

the portfolio in terms of its goals.

17
It is generally acknowledged that singular contents convey a specific level of risk.
Portfolio helps in spreading the risk in numerous securities. Hence, the risk is diminished
The fundamental standard is that if a portfolio holds a few resources or securities that
may incorporate money additionally, regardless of whether one turns sour the other will
furnish assurance with the misfortune.
The expansion can be either vertical or flat in vertical enhancement a
Portfolio can have contents of various organizations inside a similar industry. In flat
Expansion one can have diverse contents browsed distinctive enterprises.
EXAMPLES OF VERTIVAL DIVERSICATION

(A) Cement Industry (B)Textile Industry

Acc ltd. Garden Silk Mill
JK Cement Reliance Industries
L&T Grasim Industries
Birla Cement Bombay Dyeing
Vishnu Cement Bacode Rayon
Priya Cement NEPC Textiles
Ramco Cement Choc Lind Textiles

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HORIZONTAL DIVERSIFICATION

Acc Ltd (Cement)

Garden Silk Mill (Textiles)
Infosys Ltd (Software)
Expansion should nor be excessively vast or to less. It ought to be a satisfactory
enhancement as indicated by the measure of the portfolio.

Conventional methodology broadening ought to be identified with the nature of contents

which prompts nature of portfolios.

Experience has appeared past the specific securities by including more securities costly.
Simple diversification reduces risk:-

A benefit's absolute risk can be isolated into precise in addition to unsystematic

risk, as appeared as follows.

Deliberate Risk (UNDIVERSIFICABLE RISK) + Unsystematic risk (diversifiable

risk)=Total risk=Var (r).

Unsystematic risk is that part of the is one of a kind to the firm ( for instance, risk
because of strikes and the board blunders). Unsystematic risk can be decreased to zero by
straightforward enhancement.

Basic broadening is the irregular determination of securities that are to be added to a

portfolio. As the quantity of arbitrarily chosen securities added to a portfolio is
expanded, the dimension of unsystematic risk approaches zero.

MARKOWITZ MODEL THE MEAN – VARIANCE

CRITERION

Dr. harry Morkowitz is credited with building up the main current portfolio
analysis display so as to orchestrate the ideal distribution of benefits inside portfolio. To
achieve this target, Morkowitz created produced portfolios inside a reward risk setting.
Basically Morkowitz show is a therotical outline work for the analysis of risk return
decision. Choices dependent on the idea of effective portfolions.

A portfolio is proficient when it is relied upon to yield the most noteworthy return for the
lovel of risk acknowledged or, on the other hand, the littlest portfolio risk for a
predefined dimension of anticipated return. To construct an effective portfolio
combinarion with the littlest fluctuation at the arrival level is found. As this procedure is
rehashed for other anticipated returns, set of proficient portfolio is created.

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ASSUMPTIONS
The morkowitz show depends on a few suspicions with respect to financial
specialist conduct.

1. Investors consider every speculation elective as being spoken to by a likelihood

appropriation of anticipated returns over some holding period.

2. investors amplify one period-anticipated utility and have utility bend, which
exhibits decreasing minimal utility of riches.

3. Individuals gauge risk based on the fluctuation of anticipated returns.

4. Indigestions base choices exclusively on anticipated return and change of profits

as it were.

5. for a given risk level, speculators favor exceptional yields to bring down returns.
Also for a given dimension of anticipated return, financial specialist incline toward less
risk to more risk.

Under these suspicions, a solitary resource or arrangement of advantages is viewed as

"productive" if no other resource or arrangement of benefits offer higher expected come
back with a similar risk or lower risk with the equivalent anticipated return.

THE SPECIFIC MODEL

In building up his model, Morkowitz first discarded the venture conduct decide
that the speculator ought to augment anticipated return. This standard suggests that the
non-expanded singles security portfolio with the most noteworthy expected return is the
most alluring portfolio. Just be purchasing that solitary security can expect return be
augment. The single-security portfolio would clearly be ideal if the speculator were
consummately sure that this most astounding expected return would rurn out to be the
genuine return. How ever. Under genuine states of vulnerability, most risk unfriendly
financial specialists join with morkowitz in disposing of the job of calling gor expanding
anticipated returns. As an option, morkowitz offers the "ezpected returns/fluctuation of
profits" rule.

Morkowitz hs demonstrated the impact of enhancement by perusing the risk of securities.

As indicated by him, the security with covariance, wich is either negative or low among
them, is the best way to lessen risk. Morkowitz has possessed the capacity to demonstrate
that securities which have not exactly positive connection will lessen risk without, in any
capacity, cutting the arrival down. As per his exploration study a low relationship level
between securitiws in the portfolio will indicate less risk. As indicated by him, putting
resources into expansive number of securities isn't the correct strategy for speculation. It
is the correct sort of secutity, which bring the most extreme
Henry Morkowitz has given the following formula for a two security
portfolio.

OP2 = X12O12+X22O22+2(X1) (X2) (O12) O1 O2

OP = X12O12+X22O22+2(X1) (X2) (O12) O1 O2

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OP2 = Variance of the portfolio return
OP = Standard deviation of the portfolio return
X1 = Proportion of the portfolio invested in security 1.
X2 = Proportion of the portfolio invested in security 2.
O1 = Standard deviation of the portfolio return on security 1.
O2 = Standard deviation of the portfolio return on security 2.
O12 = Coefficient of correlation between the returns on securities 1 and 2.

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EFFICIENT FRNTIER
OR
EFFICIENT PORTFOLIO
To build an effective portfolio , we need to automate different blends of interests
in a bushel and assign them as portfolio one and n . the normal returns shape these
portfolios must be worked out . the risk on these portfolios is to be assessed by
estimating the standard deviation of various portfolio returns . so as to see all the more
effectively, we will see morkowitz graphical determination of portfolio.

On the off chance that there can n assests accessible in the capital market we can
establish two resource portfolio three resource portfolio, four resource portfolio and n
resource portfolio. For every portfolio there are n conceivable extents of speculations .
together they result in a nearly vastness number of portfolios . the risk and return can be
found in chart beneath
Xp
Ry

Rx

O x
2 p
RISK
FINDINGS
The morkowitz graphic selection of portfolio is said to be an efficient one
because if an investor is ready to take risk at ox he can vote the last portfolio y . from the
risk oz and rx point of view it is not an efficient portfolio

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

At the point when the external purposes of an effective portfolio are jointed a
shell is framed or a broken egg is framed the shape relies on level of co connection
among securities subsequently the shell is called achievable set , doable set or
opportunity set it is supposed in light of the fact that all the accessible venture openings
in the market like either on the fringe of inside the outskirt
CONCEPT OF EFFICENT PORTFOLIO
Expect that x is chosen it is a proficient portfolio on the grounds that

1. If he is plan to go for broke of bull for a similar risk y . gives in the higher rate of
ry in this manner y are a predominant portfolio and x is an overwhelmed portfolio

2. if a speculator is happy with the arrival of rx a similar return can be earned by

picking portfolioz which has a littler risk of oz ( as against bigger bull )

The predominance expresses that among all the speculation openings accessible with a
given restore the venture with the least risk is the most attractive one or among the

22
interests in a given risk class the one with the most elevated come back with the most
alluring one risk rule is additionally called proficient set hypothesis

In the light of this the fragment of a b is the relavant part of the doable set it is known as
the morkowitz boondocks it is alleged in light of the fact that all proficient portfolio lie
on this outskirts .

A productive portfolio is one , that most elevated return for given return or a base risk for
a given restore, these proficient portfolio are alos allude as mean difference effective
portfolio.The state of the productive outskirts is given by Rp/Op
MODIFICATIONS TO THE EFFICIENT FRONTIER
Two modifications to efficient frontier must be decided what happens when short
selling is added and what happens when leveraged portfolio are added?
A) SHORT SELLING

The capacity to short move effectsly affects the proficient boondocks. The wilderness
most likely moves up and to one side, and it proceeds to one side. The capacity to short
move securities made once more arrangement of conceivable speculation. A security sold
shor produces a positive return when security has an extensive decline in cost and
negative return when its costs increment. It conceivably enhances the proficient
boondocks in light of the fact that the capacity to shor move twofold the quantity of
conceivable ventures .since financial specialist more terrible off. On the off chance that it
never pays to short move that more regrettable that can happenis that effective
boondocks is unaltered. Without short deals , all financial specialists can do isn't to hold
securities that they accept do ineffectively.

With short deals, an open door is made that is relied upon to have nearly the contrary
attributes of the speculation when acquired. With short deals it is conceivable, in a sence,
to disinvest in poor speculation and thus gain inadequately.

In the event that it never pays to short move any security, the proficient outskirts is
moved up and to one side. This is a case of the old monetary age that a leader can not be
more awful of by being given extra decisions and the chief may will be in an ideal
situation. What's more, short deals enable the speculator to diminish or dispose of market
risk in a vast all around differentiated portfolio, one of a kind risk is dispensed with and
just market risk remains. Short deals enable the decrease of market risk to exceptionally
low levels.Thus, the expansion of short position works as a supporting system,
diminishing the market presentation of a portfolio.

The expansion of the productive boondocks to the privilege emerges from the propensity
of a lot of short pitching to build the risk and profit for the portfolio. This expansion in
risk in straightforward. Short deals can include boundless misfortune. The exercise to be
lerned from this is short deals can build the conceivable dimension of return for any
dimension of risk. Short deals can be mishandled and positions taken that are too exteme.
Be that as it may, short moving fundamentally isn't terrible. Like some other speculation
technique, it very well may be utilized judiciously orimprudently.
B) LEVERAGED PORTFOLIOS
Morkowitz demonstrate, which perceived the presence of both methodical and
unsystematic risk did not take into account acquiring and loaning openings. The
speculator is expected to have a specific measure of starting riches to contribute for a

23
given period. Of the considerable number of periods that are accessible, the ideal one is
sown to relate to the point where one of the financial specialist's impassion bends is
digression to the productive set.

Toward the finish of the holding time frame, the financial specialist's underlying riches
will have either icreased or diminished, contingent on the portfolio's rate of return. Once
more, in the Morkowitz approach, it is accepted that the benefits being considered for
venture are exclusively risky, that is every last one of the N risky resources has an

Unsure return over the financial specialist's holding period, and these are risky, besides
in the Morkowitz approach, the speculator isn't permitted to utilize obtained cash.
Alongside his her underlying riches, to buy an arrangement of benefits. This implies the
speculator isn't permitted to utilize financial use.

To consume the Morkowitz approach, a speculator can consider risk free resources and
financial use by first putting resources into risky resources as well as in risk free
resources, and second y obtaining cash at a given rate of premium.
RISK FREE ASSETS
An interest in the risk free resources is frequently alluded TO AS RISK FREE
LENDING Since methodology includes contributing for a solitary holding period, it
implies that the arrival of the risk free resource is sure. That is, if the financial specialist
buys this benefit toward the start of the holding time frame, at that point the speculator
knows precisely what the estimation of the advantage will be toward the finish of the
holding time frame. Since there is no vulnerability about the terminal estimation of the
risk free resource, the standard deviation of the risk free resource is, by definition zero.
Thus, this implies the covariance between the rate of profit for the risk free resource and
the rate of profit for any risky resource is zero.
INVESTING IN BOTH THE RISK FREE ASSET AND A RISKY
ASSET
The productive outskirts would be changed considerably if a risk free security is
incorporated among accessible speculation openings. While a risk free security does not
exist in the strict feeling of the word, there are securities, which guarantee come back
with relative conviction. They are portrayed by a nonappearance of default risk and
financing cost, full installment of essential is guaranteed without genuine prospect of
capital misfortune emerging from changes in the dimension of intrest rate. Risk free
securities of this sort incorporate money, transient treasury bills and time stores in spaces
or reserve funds and advance affiliation; money would be ruled by the other positive
return speculations.

Allowed the chance to either obtain or loan at the risk free rate, a speculator continue to
distinguish the first portfolio by plotting his or her lack of interest bends on diagram and
taking note of where one of them is digression to the detachment effective set.

For instance portfolio has a normal return of 11% and a standard deviation of 12.5%. In
any case, portfolio isn't proficient, since portfolio B has the equivalent expected return
however a standard deviation of just 8%. Portfolio yet has higher return and
indistinguishable risk from portfolio, it is increasingly alluring then portfolio however
not effective, since arrangement of has a still higher come back with the normal level of
risk as e and h. Portfolio A will be a solitary value portfolio that has the most elevated
return and risks: not the slightest bit can speculator

24
 CAPITAL ASSET PRICING MODEL (CAPM)
The huge risk for an individual asset is productive risk (or market risk) in light of the fact
that non promote risk can be abstained from by improvement, the association between as
asset's entry and its conscious risk can be imparted by the CAMP, which is also called
the security feature line (sml). The condition for the CAMP is as follows :

E(ri) = R + E (rm) – R) bi

Where E (ri) is the expected for an asset,

R is the risk free rate (usually assumed to be a short term T- bill rate).
E (rm) equals the expected market return (usually assumed to be the S & P 500).
Bi denotes for the asset s beta,

The CAPM is an equilibrium model for measuring the risk return trade off for all assets
including both inefficient and efficient portfolios. A graph of the CAPM is given below :

E (rs)

E(rm
)
R D
Ev
THE CAPM OF SECURITY MARKET LINE (SML)
FINDINGS

Delineates two resources. U and O, that isn't in balance on the CAPM. Resource
U is underestimated and in this manner, a change alluring advantage for claim. U's cost
will ascend in the market as more financial specialists buy it. Notwithstanding, as U's
costs goes up, its arrival falls. At the point when U's arrival tumbles to the arrival reliable
with the beta on the SML, harmony is accomplished. With O, the polar opposite happens.
Financial specialists will endeavor to move O, since it is exaggerated and along these
lines put descending weight on O's weight. At the point when the arrival on resource O
increments to the rate that is steady with the beta risk level given by the SML, harmony
will be accomplished and down ward value weight will stop.
ASSUMPTIONS UNDERLYING CAPM

The Capital Asset Pricing Model (CAPM) is a balance show. The deduction of
the m odel depends on a few suspicions about the financial specialists and the market,
which we present underneath for culmination. Innovators are expected to consider just
two parameters of return conveyance. To be specific the mean and the fluctuation, in
making a decision of portfolio. At the end of the day, it is accepted that a security can be
totally spoken to in terms of its normal return and difference and those financial
specialists carry on as though asecurity were a product with to characteristics namels
expected return which is attractive trait and change which is an unfortunate quality.

25
Speculators should be risk unwilling and for each extra unit of risk they take. They
request pay in terms of anticipated return.

Again the capital market is thought to be productive. A productive market infers that all
new data, which could conceivable influence the offer cost, ends up accessible to every
one of the speculators rapidly and pretty much at the same time. Consequently in a
productive market no single financial specialist has an edge over another in terms of data
controlled by him, since all speculators are as far as anyone knows well.

Educated and discerning, implying that every one of them process the accessible data
pretty much similar. Lastly in a productive market, all financial specialists are value
takers. That is no speculator is so large as to influenced the cost of a security essentially
by ethicalness of his exchanging that security.

The Capital Asset Pricing Model additionally accept that the distinction among loaning
and obtaining rates are unimportantly little for financial specialists. Additionally, the
financial specialists are expected to settle on a solitary period speculation choices. The
expense of transactions and data are thought to be irrelevantly little. The model likewise
overlooks presence of assessments, which may impact the financial specialists, conduct.

The way that a portion of the above presumptions to some degree prohibitive has pulled
in extensive analysis of the model this in any case, require not divert us from the
principle trust of model. The Capital Asset Pricing Model only infers that in a sensibly
well working business sector where countless financial expert work, all securities will
yield return steady with their risk, since if this was not, the proficient examiners will
most likely exploit the open doors for unbalanced returns and in this manner decrease
such chances, thus, as indicated by CAPM, in an effective market return lopsided to risk
are hard to get a hold of. Suppositions concerning the financial specialist's conduct,
advertise effectiveness loaning and getting rates. And so forth is to be taken not in their
exacting sense, but instead has as estimated conditions. Factors, for example, exchange
costs, and so on can be effectively consolidated into the model for more prominent
thoroughness.

26
DEFINITION OF INVESTMENT
As indicated by Fabling, "Venture might be characterized as the buy by an individual or
institutional speculator or institutional speculator or a financial or land that creates an
arrival corresponding to the risk accepted over some future speculation period" Accoding
to D.E. Fisher and RJ Jordan, "Venture is a dedication of funds made in the desire for
some positive rate of return. In the event that the venture is appropriately attempted, the
arrival will be proportionate with the risk the speculator accept"
CONCEPT OF INVESTMENT
Speculation will for the most part be utilized in its financial sense and such venture is the
allotment of money related assets to resources that are relied upon to yield some pick up
or positive return over a given timeframe. Speculation is a dedication of an individual's
funds to infer future pay as intrigue, profits, lease, premiums, annuity benefits or the
valuation for the estimation of his foremost, capital.

Any venture might want to the know the media or scope of speculations so he con sue his
attentiveness and spare in those speculations which will give him both security and stable
return. A definitive target of the financial specialist is to determine an assortment of
ventures that meet his inclination for risk and anticipated return. The speculator will
choose the portfolio, which will expand his utility. Another imperative thought is the
demeanor and brain research of the speculator. It isn't just the development of a portfolio
that will guarantee the most elevated anticipated return, yet it is the fulfillment of the
need of the financial specialist.

Numerous kinds of speculation media or channels for making ventures are accessible.
Securities running from risk free instruments to exceptionally theoretical offers and
debentures are accessible for elective speculations.

All ventures are riskly, as the speculator parts with his cash. An effective speculator with
legitimate preparing can decrease the risk and mixmize returns he can stay away from
entanglements and secures his interests.

Cash and data are the premise and the principal necessity of speculation is the
accessibility of cash or investment funds. In any case, cash isn't sufficient, as venture is
commonly made based on data of the organizations, instruments industry and economy,
however cash and data flow helps making speculation the executives.

There are distinctive strategies for characterizing the speculation roads. A noteworthy
grouping is physical ventures and Financial Investments. They are physical, if sparing
are utilized to obtain physical resources, helpful for utilization or generation. Some
physical resources like furrows, tractors or reapers are helpful for utilization or creation.
A couple of helpful physical asets like vehicles, jeeps, and so forth., are valuable in
business. Numerous things of physical resources are not valuable for further generation
or products or make salary as on account of shopper sturdy, gold, silver, and so on.,
Among various sorts of ventures, some are attractive and transferable and others are most
certainly not. Instances of attractive resources are offers and debentures of open
constrained organizations, for all intents and purposes the recorded organizations on
stock trade, obligations of P.S.U. government securities and so on., Non-attractive
securities or interests in boycott stores, provident funds and benefits funds, protection
endorsement, post office stores, national sparing authentication, organization stores,
private restricted organizations shares. And so forth.,

27
INVESTMENT PROCESS :
The venture might be depicted in the stages :

1. Venture POLICY : The principal arrange determines and includes individual financial
undertakings and goals before making. It might likewise be known as the readiness of
speculation policy organize. The financial specialists need to see that he ought to
probably make a backup stash, a component of liquidity and snappy convertibility of
securities into money. This stage may, consequently be known as the best possible time
distinguishing resources and thinking about the different highlights of venture.

2. Speculation ANALYSIS : After organizing a sensible ordfer or kinds of venture

favored, the subsequent stage is to investigations the securities accessible for ventures.
The speculators must make a similar analysis of sort of industry; sort of securities and so
on the essential worry at this stage is frame conviction with respect to highlight conduct
or evaluated and stock, the normal return and related risk.

3. Venture VALUATION : Investment esteem, all in all, is taken to be available worth to

the proprietors of future advantages from speculations. The speculator needs to hold up
under at the top of the priority list the estimation of these ventures. A suitable
arrangement of loads must be connected with the utilization of anticipated advantages to
appraise the estimation of the venture resources, for example, stock, debentures and
bonds and different resources. Correlation of the incentive with the present market cost
of the advantage permits a determination of the overall appeal of the benefit. Every
advantage must be an incentive on its individual legitimacy.

28
CHAPTER-III
COMPANY PROFILE

29
 COMPANY PROFILE

Origin
India Info line Ltd., was established in 1995 by a gathering of expert with perfect

instructive capabilities and expert qualifications. Its institutional speculators incorporate

Intel Capital (world's) driving innovation organization, CDC (advanced by UK

government), ICICI, TDA and Reeshanar.

India Info line bunch offers the whole array of speculation items including stock broking,

Commodities broking, Mutual Funds, Fixed Deposits, GOI Relief securities, Post office

investment funds and life coverage. India Info line is the main corporate specialist of

ICICI Prudential Life Insurance Co. Ltd., which is India' No. 1 Private division extra

security organization.

Www.indiainfoline.com has been the main India Website to have been recorded by none

other than Forbes in it's 'Best of the Web' review of worldwide site, once as well as

multiple times in succession and checking... "An absolute necessity read for financial

specialists in south Asia" is the manner by which they depict India Info line. It has been

appraised as No.l the classification of Business News in Asia by Alexia rating.

Stock and Commodities broking is offered under the exchange name 5paisa. India Info

line Commodities pvt Ltd., an entirely possessed auxiliary of India Info line Ltd., holds

enrollment of MCX and NCDEX

 India Info line was initially fused on October 19, 1995 as Probity

Research and Services Private Limited at Mumbai under the Companies Act, 1956 with

30
Registration No. 11 93797. India Info line started activities as an autonomous supplier of

data, analysis and research covering Indian organizations, financial markets and

economy, to institutional clients. India Info line turned into an open constrained

organization on April 28, 2001 and the name of the Company was changed to Probity

Research and Services Limited. The name of the Company was changed to India

Infoline.com Limited on May 23, 2001 and later to India Info line Limited on March 23,

2002.

 In 1999, India Infoline.com recognized the capability of the Internet to

take into account a mass retail section and changed our plan of action from giving data

administrations to institutional clients to retail clients. Thus India Info line propelled

Internet entryway, www.indiainfoline.com in May 1999 and began giving news and

market data, autonomous research, interviews with business pioneers and other particular

highlights.

 In May 2001, the name of India Info line was changed to India

Infoline.com Limited to mirror the change of our business. Over some stretch of time,

India Infoline.com has risen as one of the main business and financial data

administrations supplier in India.

 In the year 2001, India Info line utilized its situation as a supplier of financial

data and analysis by broadening into value-based administrations, principally for web

based exchanging offers and securities and online just as disconnected dispersion of

individual financial items, as shared funds and RBI Bonds. These exercises were carried

on by our entirely possessed backups.

31
 India Info line broking administrations was propelled under the brand

name of 5paisa.com through our backup, India Info line Securities Private Limited and

www.5paisa.com, the e-broking entrance, was propelled for internet exchanging July

2001. It consolidated aggressive financier rates and research, upheld by Internet

innovation other than venture counsel from an accomplished group of research experts,

India Info line additionally offer continuous stock statements, advertise news and value

graphs with various instruments for specialized analysis.

Main Objects of the Company

Principle protests as contained in its Memorandum or Association may be:

 To connect with or embrace programming and web based administrations,

information handling IT empowered administrations, programming advancement
administrations, moving ad space on the webpage, web counseling and related
administrations including web planning and web support, programming item
improvement and promoting, programming supply administrations, PC consultancy
administrations, E-Commerce of various kinds including electronic financial
intermediation business and E-broking, statistical surveying, business and the executives
consultancy.

 To attempt, lead, study, continue, help, advance any sort of research, test,
examination, overview, formative work on economy, enterprises, corporate business
houses, rural and mineral, financial establishments, outside financial foundations, capital
market on issues identified with speculation choices essential value showcase, optional
value advertise, debentures, security, adventures, capital funding recommendations,
focused analysis, arrangements of corporate/industry profile and so on and exchange/put
resources into inquired about securities

32
The corporate structure
The India Infoline bunch contains the holding organization, India Infoline Ltd,
which has 5 completely possessed backups, occupied with unmistakable yet correlative
organizations which together offer an entire bundle of items and administrations to profit
grow.The corporate structure has developed to consent to peculiarities of the
administrative system yet at the same time flawlessly help accomplish collaboration and
enable adaptability to adjust to elements of various businesses.The parent organization,
India Infoline Ltd claims and chiefs the web properties www.Indiainfoline.com and
www.5paisa.com. It additionally embraces explore Customized and off-the-shelf.Indian
Infoline Securities Pvt. Ltd. is an individual from BSE, NSE and DP with NSDL. Its
business envelops securities broking Portfolio Management services.India Infoline.com
Distribution Co. Ltd., Mobilizes Mutual Funds and other individual speculation items,
for example, securities, settled stores, etc.India Infoline Insurance Services Ltd. is the
corporate specialist of ICICI Prudential Life Insurance, occupied with moving Life
Insurance, General Insurance and Health Insurance products.ndia Infoline Commodities
Pvt. Ltd. is an enlisted items specialist MCX and offers fates exchanging
commodities.India Infoline Investment Services Pvt Ltd., is demonstrating edge funding
and NBFC administrations to the clients of India Infoline Ltd.,
India Info line Group
The India Info line gathering, containing the holding organization, India
Infoline Limited and its completely possessed backups, straddle the whole financial
administrations space with contributions extending from Equity research, Equities and
subordinates exchanging, Commodities exchanging, Portfolio Management Services,
Mutual Funds, Life Insurance, Fixed stores, GoI securities and other little reserve funds
instruments to credit items and Investment saving money.

CHAPTER-IV
33
 DATA ANALYSIS
&
INTERPRETATION

34
 DATA ANALYSIS AND INTERPRETATION
PURPOSE OF THE STUDY
The purpose of the study is to find out at what percentage of investment
should be invested between two companies , on the basis of risk and return of each
security in comparison.
These percentages help in allocating the funds available for investment based on
risky portfolios.

Implementation of study

For implementation the study , 10 securities or stocks constituting the sensex

market are selected of the month closing share movement price data from website
WWW.SHCIL.COM

In order to know the risk of the stock or security , we use the formula , which
is given below .
Standard Deviation = Variance

1
Variance = __________ (R-R)2
n-1 t = 1
Where
(R-R)2 = Squares of difference between sample and mean

N = number of sample observation

After that, we need compare the stocks or securities of two companies with
each other by using the formula of correlation coefficient a given below.

35
FORMULA:
n
Co-variance (COV AB) (RA-RA) (RB-RB)
t=n
Correlation Coefficient (PAB) = COA AB
____________
(Std.A)(Std.B)
Where
(RA-RA)(RB-RB) = combined deviation of A&B
(Std.A)(Std.B) = standard deviation of A&B
COV AB = covariace between of A&B
n = number of observations
The next step would be the construction of the optimal portfolio on the basis
of what percentage of investment should be invested when two securities and
stocks are combined i.e, calculation of two assets portfolio weight by using minimum
vaiance equation which is given below :
The next and final step is to calculate the portfolio risk (combined risk ), that
shows how much is the risk is reduced by comining two stocks or securities by using
this formula.

Xa = ² b –pab a b

________________
² a+ b-2 pab a b

36
CALCULATED STANDARD DEVIATION AND AVERAGE

Company Name Average Standard Deviation

Rel.communication. 192.73 33.47
Bharti Airtel 639.20 34.60
Matrix Laboratories Ltd. 79.02 8.21
Dr. Reddy’s 457.45 19.13
Taj GVK 46.65 2.676
Hotel Leela 19.13 1.42
GMR Infrastructure Ltd. 75.57 4.76
IVRCL 119.96 23.19
Ambuja Cement Ltd . 104.90 43.11
Kakatiya Cement 60.126 2.33
Total 1794.736 199.89

CALCULATED STANDARD DEVIATION AND AVERAGE

Company Name Correlation Co-efficient Portfolio Risk(%)

Rel.Communication&Bharthi 7.469 47.48%

Airtel
Matrix Ltd .&Dr.Reddy’s 0.366 11.95%

Taj GVK& Hotel Leela 3.104 3.01%

GMR Infrastucture&IVRCL 0.531 6.28%

Ambuja Cement .&Kakatiya -0.012 39.57%

Cement

CONCLUSION
If there should be an occurrence of consummately securities or stocks the risk can
be diminished to a base point. If there should arise an occurrence of adversely related
securities the risk can be decreased to at a Zero( which is organizations risk ) however
the risk wins the equivalent for the security or stock in the portfolio .

If there should arise an occurrence of portfolio the executives contrarily corresponded

resources are generally productive. Be that as it may, in the above determined
relationship coefficient it is that the connection between's Taj&GVK and HOTEL
LEELA which implies the blend of these portfolios are great at energy to increase
future . speculators may put their cash for long haul so as to procure more benefit
TWO ASSETS PORTFOLIO HEIGHTS

1. Rel.Communication : 0.51

37
 Bhathi Airtel : 0.49
---------
1.00
---------
2. Matrix : 0.34
Dr.Reddy’s : 0.66
---------
1.00
---------
3. Taj& GVR Hotels : 0.70
Hotel Leela : 0.30
---------
1.00
----------
4. Ambuja Ltd . : 0.29
Kakatiya Cement . : 0.71
-----------
1.00
------------
5. GMR Infrastructure Ltd . : 0.87
IVRCL : 0.13
----------
1.00
-----------

38
 FINDINGS FOR TWO ASSET’S PORTFOLIO’S
1. RELIANCE COMMUNICATION AND BHARTHI AIRTEL

As per the calculation and study, the Reliance communication bears a

proportion of 0.51 and where as Bharthi Airtel bears a proportion of 0.49 which is very
negligible of risk involves in the two companies the standard deviation of two companies
are 33.47 and 34.60.
In this combination the risk of Bharthi Airtel is less than Reliance
communication i.e., 14.726<17.26. So investors can invest their money in Bharhi Airtel.

2. MATRIX LABORETORIES AND Dr.REDDY’S

In this combination investors can invest their funds in the proportion of 0.34 in
Matrix Laboratories and 0.66 in Dr.REDDY’S because their standard deviation of both
companies 8.21 and 19.13 respectively which means the risk of is Dr.REDDY’S more
than Matrix Laboratories.
So, if any investor wants to invest his/her money in this portfolio it is suggested that
he should invest large portion of his investment in matrix Laboratories and remaining
in Dr.REDDY’S.

3. TAJ &GVK HOTELS AND HOTEL LEELA

According to this combination the weights or proportion of investment is 0.70 for
Taj & GVK Hotels and 0.30 for Hotel Leela. Here the investors can invest more funds in
Hotel Leela and less in Taj&GVK because the standard deviation of Taj &GVK hotels is
2.676which is more than compared to Hotel Leela i.e., 1.42 which means there is more
risk In Taj & GVK hotels when compared to Hotel Leela.

4. GMR INFRASTRUCTURE AND IVRCL

The combination of GMR I infrastructure and IVRCL gives the weights or

proportion of investment is 0.87 and 0.13 respectively based on the standard deviation of
GMR Infrastructure is 4.076 IVRCL and is having 23.19 which means there is more risk
in IVRCLwhen compared with GMR I infrastructure .

So, the investor can invest more of their funds in GMR Infrastructure because of
less risk associated with it.
5. AMBUJA CEMENT AND KAKATIYA CEMENT
The investors have another alternative with this combination in the proportion of
0.29 and 0.71 for Ambuja Cement and Kakatiya Cement respectively. The proportion of
the investment involves the standard deviation of both securities are 43.11 and 2.33
respectively.
In comparison of standard deviation it is clear that the Ambuja Cement bears a
more risk when compared with Kakatiya Cement. So, it is suggested that to the investors
the founds should be invested more in Kakatiya Cement when compared to Ambuja
Cement .

39
 Date Rel.comm Bharthi Matrix Dr.Reddy’s Taj Hotel GMR IVRCL Ambuja Kakatiya
Airtel GVK Leela Cement Cement
1-1-19 246.75 719.75 92.70 466.5 48.80 19.65 77.45 149.8 70.55 61.95

2-1-19 252.19 705.65 94.50 468.7 50.25 20.55 85.00 190.35 69.5 60.05

5-1-19 262.45 685.4 92.60 470 51.20 21.05 82.75 192 70.05 61.00

6-1-19 249.10 657.4 90.70 489.95 50.00 22 81.60 199 77.3 66.70

7-1-19 206.19 648.85 75.00 461 46.55 20.05 72.50 121.45 72.35 61.00

9-1-19 196.85 638 68.90 457 47.30 19.25 66.85 114.4 72.9 60.20

12-1 179.40 621.6 70.05 469.95 45.85 19.3 76.00 117.5 69.5 60.10
-19
13-1-19 198.30 608 71.45 453 48.25 19.4 71.40 119 71.65 58.70

14-1-19 199.35 623.5 71.50 487 46.30 19.2 77.00 119.5 71.8 60.35

17-1-19 174.35 606.9 74.00 446 47.05 19.95 71.10 119.55 69 60.70

19-1-19 191.65 639.20 75.05 449.95 48.30 19.19 72.35 111 71 59.30

19-1-19 193.45 645.25 72.80 456 49.00 19 76.20 112.8 73.95 62.00

20-1-19 176.30 614 73.65 466 46.60 19.9 74.80 111.25 69.05 59.80

21-1-19 170.19 576.9 75.00 442.05 44.50 19 75.50 108 70.9 59.00

22-1-19 197.30 620 75.60 430.5 42.50 17.75 77.19 94.25 69.35 59.95

23-1-19 190.20 614.5 78.00 432 43.25 17.8 72.75 90.3 67.4 59.00

27-1-19 171.20 646.85 85.00 441 43.20 17.7 75.00 97.4 69.3 56.50

28-1-19 196.00 657.5 79.00 455 45.00 17.8 76.80 100.2 70.8 57.10

30-1-19 170.85 623.2 86.00 449.95 42.55 19.19 73.65 110.5 70.6 59.00

CALCULATION OF STANDARD DEVIATION OF

RELIANCE COMMUNICATION
R Ř R- Ř (R- Ř)
Date
Share price Average Deviation Sq.Dev.
1-1-19 246.75 192.73 54.02 2919
2-1-19 252.19 192.73 59.42 3530.7
5-1-19 262.45 192.73 69.72 4860.8
6-1-19 249.10 192.73 56.37 3177.5
7-1-19 206.19 192.73 19.42 190
9-1-19 196.85 192.73 -5.88 34.57
12-1- 179.40 192.73 -19.33 177.68

40
19
13-1- 198.30 192.73 -24.43 596.82
19
14-1- 199.35 192.73 -3.38 11.14
19
17-1- 174.35 192.73 -19.38 337.8
19
19-1-19 191.65 192.73 -11 121
19-1-19 193.45 192.73 -9.28 86.1
20-1-19 176.30 192.73 -19.43 269.94
21-1-19 170.19 192.73 -22.58 510.8
22-1- 197.30 192.73 -25.43 646.6
19
23-1- 190.20 192.73 -32.53 1058.2
19
27-1-19 171.20 192.73 -21.53 463.5
28-1-19 196.00 192.73 -26.73 714.49
30-1-19 170.85 192.73 -21.88 478.7
∑R=3661.95 ∑(R-Ř)=
20173.34
∑R 3661.95
Average (Ř)=──── = ─────── = 192.73
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ─────(20173.34)
n–1 t =1 19 − 1

= 1120.74
__________ _________
Standard Deviation = √ variation = √ 1120.74

= 33.47

41
 CALCULATION OF STANDARD DEVIATION OF
BHARTI AIRTEL

R _ _
Date Share price R R-R (R-R)²
Average Deviation Sq.Dev
1-1-19 719.75 639.20 77.55 6014
2-1-19 705.65 639.20 66.45 4419.6
5-1-19 685.4 639.20 46.2 2194
6-1-19 657.4 639.20 19.2 331
7-1-19 648.85 639.20 9.65 93
9-1-19 638 639.20 -1.2 1.44
12-1-19 621.6 639.20 -17.6 310.76
13-1-19 608 639.20 -31.2 973
14-1-19 623.5 639.20 -19.7 246.49
17-1-19 606.9 639.20 -32.3 1043
19-1-19 639.20 639.20 -4.55 20.70
19-1-19 645.25 639.20 6.05 36.60
20-1-19 614 639.20 -25.2 635
21-1-19 576.9 639.20 -59.3 3519
22-1-19 620 639.20 -19.2 368.64
23-1-19 614.5 639.20 -21.7 470.8
27-1-19 646.85 639.20 7.65 58.5
28-1-19 657.5 639.20 21.3 453.69
30-1-19 623.2 639.20 -19 199
∑R=12144.9 ∑(R-R)²=21960.22

_ ∑R 12144.9
Average ( R ) = ──── = ─────── = 639.20
N 19

1 n _ 1
Variance = ――― ∑ (R−R )² = ─────(21960.22)
n–1 t =1 19 − 1

= 1197.79
__________ _________
Standard Deviation = √ variation = √ 1197.79

= 34.60

42
 CALCULATION OF STANDARD DEVIATION OF MATRIX
LTD.

Date R R R-R (R-R)²

Share price Average Deviation Sq.Dev.

1-1-19 92.70 79.02 19.68 197

2-1-19 94.50 79.02 19.48 239.6
5-1-19 92.60 79.02 19.58 194.4
6-1-19 90.70 79.02 11.68 196.4
7-1-19 75.00 79.02 -4.02 19.19
9-1-19 68.90 79.02 -10.12 102.4
12-1-19 70.05 79.02 -8.97 80.4
13-1-19 71.45 79.02 -7.57 57.30
14-1-19 71.50 79.02 -7.52 56.5
17-1-19 74.00 79.02 5.02 25
19-1-19 75.05 79.02 -3.97 19.7
19-1-19 72.80 79.02 -6.22 38.6
20-1-19 73.65 79.02 -5.37 28.8
21-1-19 75.00 79.02 -4.02 19
22-1-19 75.60 79.02 -3.42 11.6
23-1-19 78.00 79.02 -1.02 1.04
27-1-19 85.00 79.02 5.98 35.7
28-1-19 79.00 79.02 -0.02 4
30-1-19 86.00 79.02 6.98 48.7
∑R=1901.5 ∑(R-R)² = 1219.3

_ ∑R 1901.5
Average ( R ) = ──── = ─────── = 79.02
N 19

1 n _ 1
Variance = ――― ∑ (R−R )² = ───── (1219.3)
n–1 t =1 19 − 1

= 67.405
__________
Standard Deviation = √ variation = √ 67.405

= 8.21

43
 CALCULATION OF STANDARD DEVIATION OF TAJ GVR HOTELS LTD

Date R R R-R (R-R)²

Share price Average Deviation Sq.Dev
1-1-19 48.80 46.45 2.19 4.62
2-1-19 50.25 46.45 3.6 12.9
5-1-19 51.20 46.45 4.55 20.7
6-1-19 50.00 46.45 3.35 11.22
7-1-19 46.55 46.45 -0.1 0.01
9-1-19 47.30 46.45 0.65 0.42
12-1-19 45.85 46.45 -0.8 0.64
13-1-19 48.25 46.45 1.6 2.56
14-1-19 46.30 46.45 -0.35 0.12
17-1-19 47.05 46.45 0.4 0.19
19-1-19 48.30 46.45 1.65 2.72
19-1-19 49.00 46.45 2.35 5.52
20-1-19 46.60 46.45 -0.05 2.5
21-1-19 44.50 46.45 -2.19 4.62
22-1-19 42.50 46.45 -4.19 17.22
23-1-19 43.25 46.45 -3.4 11.56
27-1-19 43.20 46.45 -3.45 11.90
28-1-19 45.00 46.45 -1.65 2.72
30-1-19 42.55 46.45 4.1 19.81
∑R=886.45 _
∑(R-R)²=128.92

_ ∑R 886.45
Average(R ) = ―― = ───── =46.45
N 19

1 n _ 1
Variance = ──── ∑ (R-R)² = ─── (886.45)
n-1 t-1 19-1

Variation = 7.192

Standard Deviation = √Variation =√7.192

= 2.676

44
 CALCULATION OF STANDARD DEVIATION OF Dr.REDDY’S

Date R R R-R (R-R)²

Share Price Average Deviation Sq.Dev
1-1-19 466.5 457.45 9.05 81.9
2-1-19 468.7 457.45 11.25 126.56
5-1-19 470 457.45 12.55 197.5
6-1-19 489.95 457.45 32.5 1056
7-1-19 461 457.45 3.55 12.60
9-1-19 457 457.45 -0.45 0.20
12-1-19 469.95 457.45 12.5 196
13-1-19 453 457.45 -4.45 19.8
14-1-19 487 457.45 29.55 873
17-1-19 446 457.45 -11.45 191
19-1-19 449.95 457.45 -7.5 56
19-1-19 456 457.45 -1.45 2.10
20-1-19 466 457.45 8.55 73
21-1-19 442.05 457.45 -19.4 237
22-1-19 430.5 457.45 -26.95 726
23-1-19 432 457.45 -25.45 647.7
27-1-19 441 457.45 19.45 270
28-1-19 455 457.45 -2.45 6
30-1-19 449.95 457.45 7.5 56
∑R=8691.55 _
∑(R-R)² =4688.36

_ ∑R 8691.55
Average(R) = _____ = _______ = 457.45
N 19
1 n _ 1
Variance = ________ ∑ (R-R)² = _______ (4688.36)
n-1 t-1 19-1

Variation =260.46
_________ ___________
Standard Deviation = √ variation = √ 260.46

= 19.19

45
 CALCULATION OF STANDARD DEVIATION OF HOTEL LEELA

Date R R _ (R-R)²
Share price Average R-R Sq.Dev
Deviation
1-1-19 19.65 19.31 0.52 0.27
2-1-19 20.55 19.31 1.42 2.01
5-1-19 21.05 19.31 1.92 3.68
6-1-19 22 19.31 2.87 8.23
7-1-19 20.05 19.31 0.92 0.84
9-1-19 19.25 19.31 0.12 0.01
12-1-19 19.3 19.31 0.17 0.02
13-1-19 19.4 19.31 0.27 0.07
14-1-19 19.2 19.31 0.07 4.9
17-1-19 19.95 19.31 -0.19 0.03
19-1-19 19.19 19.31 0.02 4
19-1-19 19 19.31 -0.19 0.01
20-1-19 19.9 19.31 -0.23 0.05
21-1-19 19 19.31 -1.19 1.27
22-1-19 17.75 19.31 -1.38 1.90
23-1-19 17.8 19.31 -1.33 1.76
27-1-19 17.7 19.31 -1.43 2.04
28-1-19 17.8 19.31 -1.33 1.76
30-1-19 19.19 19.31 -0.98 0.96
∑R=363.65 ∑(R-R)²= 36.81

_ ∑R 363.65
Average ( R ) = ──── = ─────── = 19.19
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ───── (36.81)
n–1 t =1 19 − 1

variation = 2.044

_________ ________
Standard Deviation = √ variation = √ 2.044
= 1.42

46
 CALCULATION OF STANDARD DEVIATION OF GMR INFRASTRUCTURE
LTD.

Date R R _ (R-R)²
Share price Average R-R Sq.Dev
Deviation
1-1-19 77.45 77.57 -0.12 0.01
2-1-19 85.00 77.57 7.43 55.20
5-1-19 82.75 77.57 5.19 26.8
6-1-19 81.60 77.57 4.03 19.24
7-1-19 72.50 77.57 -5.07 25.7
9-1-19 66.85 77.57 -10.72 114.9
12-1-19 76.00 77.57 -1.57 2.46
13-1-19 71.40 77.57 -6.17 38.06
14-1-19 77.00 77.57 -0.57 0.32
17-1-19 71.10 77.57 -6.47 41.8
19-1-19 72.35 77.57 -5.22 27.24
19-1-19 76.20 77.57 -1.37 1.87
20-1-19 74.80 77.57 -2.77 7.67
21-1-19 75.50 77.57 -2.07 4.28
22-1-19 77.19 77.57 -0.42 0.17
23-1-19 72.75 77.57 -4.82 23.23
27-1-19 75.00 77.57 -2.57 6.60
28-1-19 76.80 77.57 -0.77 0.59
30-1-19 73.65 77.57 -3.92 19.36
∑R=1435.85 ∑(R-R)²= 408.5

_ ∑R 1435.85
Average ( R ) = ──── = ─────── = 75.57
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ───── (408.5)
n–1 t =1 19 − 1

variation = 22.69

_________ _________
Standard Deviation = √ variation = √ 22.69
= 4.76

47
 CALCULATION OF STANDARD DEVIATION OF IVRCL LTD.

Date R R _ (R-R)²
Share price Average R-R Sq.Dev
Deviation
1-1-19 149.8 119.96 29.84 890.42
2-1-19 190.35 119.96 40.39 1931.35
5-1-19 192 119.96 42.04 1767.36
6-1-19 199 119.96 49.04 2404.92
7-1-19 121.45 119.96 1.49 2.220
9-1-19 114.4 119.96 -5.56 30.91
12-1-19 117.5 119.96 -2.46 6.05
19-1-19 119 119.96 -4.96 24.60
14-1-19 119.5 119.96 1.46 2.19
17-1-19 119.55 119.96 3.41 11.62
19-1-19 111 119.96 -8.96 80.28
19-1-19 112.8 119.96 -7.19 51.26
20-1-19 111.25 119.96 -8.71 75.86
21-1-19 108 119.96 -11.96 143.04
22-1-19 94.25 119.96 -25.96 673.92
23-1-19 90.3 119.96 29.66 879.71
27-1-19 97.4 119.96 -22.56 508.9
28-1-19 100.2 119.96 -19.76 390.45
30-1-19 110.5 119.96 -10.46 110.41
∑R=2279.25 ∑(R-R)²= 9684.29

_ ∑R 2279.25
Average ( R ) = ──── = ─────── = 119.96
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ───── (9684.29)
n–1 t =1 19 − 1

variation = 538.01

_________ _________
Standard Deviation = √ variation = √ 538.01
= 23.19

48
 CALCULATION OF STANDARD DEVIATION OF AMBUJA CEMENT LTD.

Date R R _
Share price Average R-R (R-R)²
Deviation Sq.Dev
1-1-19 70.55 104.90 -34.35 1179.9
2-1-19 69.5 104.90 -35.4 1253.19
5-1-19 70.05 104.90 -34.85 1214.52
6-1-19 77.3 104.90 -27.6 761.76
7-1-19 72.35 104.90 -32.55 1059.5
9-1-19 72.9 104.90 -32 1024
12-1-19 69.5 104.90 -35.4 1253.19
13-1-19 71.65 104.90 -33.25 1105.5
14-1-19 71.8 104.90 33.1 1105.6
17-1-19 69 104.90 -35.9 1288.8
19-1-19 71 104.90 -33.9 1149.21
19-1-19 73.95 104.90 -30.95 957.9
20-1-19 69.05 104.90 -35.85 1285.22
21-1-19 70.9 104.90 -34 1196
22-1-19 69.35 104.90 -35.55 1263.80
23-1-19 67.4 104.90 -37.5 1406.25
27-1-19 69.3 104.90 -35.6 12673.6
28-1-19 70.8 104.90 -34.1 1192.81
30-1-19 70.6 104.90 -34.3 1176.49
∑R=1993.19 ∑(R-R)²= 33467.19

_ ∑R 1993.19
Average ( R ) = ──── = ─────── = 104.90
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ───── (33467.19)
n–1 t =1 19 − 1

variation = 1959.28

_________ _________
Standard Deviation = √ variation = √ 1959.28
= 43.11

49
 CALCULATION OF STANDARD DEVIATION OF KAKATIYA CEMENT

Date R R _ (R-R)²
Share Price Average R-R Sq.Dev
Deviation
1-1-19 61.95 60.126 1.824 3.32
2-1-19 60.05 60.126 -0.076 5.7
5-1-19 61.00 60.126 -0.126 0.01
6-1-19 66.70 60.126 6.574 43.21
7-1-19 61.00 60.126 0.874 0.76
9-1-19 60.20 60.126 0.074 5.47
12-1-19 60.10 60.126 -0.026 6.7
13-1-19 58.70 60.126 -1.426 2.03
14-1-19 60.35 60.126 0.224 0.05
17-1-19 60.70 60.126 0.574 0.32
19-1-19 59.30 60.126 -0.826 0.68
19-1-19 62.00 60.126 1.874 3.5
20-1-19 59.80 60.126 -0.326 0.10
21-1-19 59.00 60.126 -1.126 1.26
22-1-19 59.95 60.126 -0.176 0.03
23-1-19 59.00 60.126 -1.126 1.26
27-1-19 56.50 60.126 -3.626 19.14
28-1-19 57.10 60.126 -3.026 9.19
30-1-19 59.00 60.126 -1.126 1.26
∑R=1142.4 ∑(R-R)²= 97.95

_ ∑R 1142.4
Average ( R ) = ──── = ─────── = 60.126
N 19

1 n _ 1
Variance = ――― ∑ ( R − R ) ² = ───── (97.95)
n–1 t =1 19 − 1

variation = 5.44

_________ _________
Standard Deviation = √ variation = √ 5.44
= 2.33

50
 CORRELATION BETWEEN REL.COMMUNICATION&BHARTHI AIRTEL

Date Dev.of(RA-ŘA) Dev.of(RB- Combined deviation

ŘB) (RA-ŘA) (RB-ŘB)
1-1-19 54.02 77.55 4199.251
2-1-19 59.42 66.45 3948.459
5-1-19 69.72 46.2 3221.064
6-1-19 56.37 19.2 1025.934
7-1-19 19.42 9.65 129.503
9-1-19 -5.88 -1.2 7.056
12-1-19 -19.33 -17.6 234.608
13-1-19 -24.43 -31.2 762.261
14-1-19 -3.38 -19.7 53.066
17-1-19 -19.38 -32.3 593.674
19-1-19 -11 -4.55 50.05
19-1-19 -9.28 6.05 -56.144
20-1-19 -19.43 -25.2 414.036
21-1-19 -22.58 -59.3 1938.994
22-1-19 -25.43 -19.2 488.256
23-1-19 -32.53 -21.7 705.901
27-1-19 -21.53 7.65 -202.9545
28-1-19 -26.73 21.3 -466.044
30-1-19 -21.88 -19 288.44
(RA-ŘA) (RB-ŘB)=19436.9255

1 n _ _
Variance = ――― ∑ ( RA − R A ) (RB-RB)
n t =1

Co-variance(cov AB) = 1
── (19436.9255) =8650.5
19
COV AB
Correlation Co.efficient (PAB) = -----------------
(Std.A)(Std.B)

8650.5 8650.5
------------------------------- = ---------------------- =7.469
(33.47) (34.60) 1198.062

51
 CORRELATION BETWEEN MATRIX LABORATORIES LTD &
Dr. REDDY’S

Date Dev.of(RA-ŘA) Dev.of(RB-ŘB) Combined deviation

(RA-ŘA) (RB-ŘB)
1-1-19 19.68 9.05 123.804
2-1-19 19.48 11.25 174.19
5-1-19 19.58 12.55 170.429
6-1-19 11.68 32.5 380.194
7-1-19 -4.02 3.55 1.810
9-1-19 -10.12 -0.45 -126.5
12-1-19 -8.97 12.5 39.9195
13-1-19 -7.57 -4.45 -223.6935
14-1-19 -7.52 29.55 86.104
17-1-19 5.02 -11.45 37.65
19-1-19 -3.97 -7.5 5.7565
19-1-19 -6.22 -1.45 -53.191
20-1-19 -5.37 8.55 82.698
21-1-19 -4.02 -19.4 108.339
22-1-19 -3.42 -26.95 87.039
23-1-19 -1.02 -25.45 19.779
27-1-19 5.98 19.45 -14.651
28-1-19 -0.02 -2.45 0.19
30-1-19 6.98 7.5 24.779
(RA-ŘA(RB-ŘB)=921.5619
1 n _ _
Variance = ――― ∑ ( RA − R A ) (RB-RB)
n t =1

Co-variance(cov AB) = 1
── (921.5619) =48.50
19
COV AB
Correlation Co.efficient (PAB) = -----------------
(Std.A)(Std.B
48.50 48.50
------------------------------- = ---------------------- =0.366
(8.21) (19.19) 192.422

52
 CORRELATION BETWEEN
TAJ& GVK HOTELS &HOTEL LEELA

Date Dev.of(RA-ŘA) Dev.of(RB-ŘB) Combined deviation

(RA-ŘA) (RB-ŘB)
1-1-19 2.19 0.52 1.119
2-1-19 3.6 1.42 5.112
5-1-19 4.55 1.92 8.736
6-1-19 3.35 2.87 9.6145
7-1-19 -0.1 0.92 -0.102
9-1-19 0.65 0.12 0.078
12-1-19 -0.8 0.17 -0.196
13-1-19 1.6 0.27 0.432
14-1-119 -0.35 0.07 0.0245
17-1-19 0.4 -0.19 -0.072
19-1-19 1.65 0.02 0.033
19-1-19 2.35 -0.19 -0.3055
20-1-19 -0.05 -0.23 0.0119
21-1-19 -2.19 -1.19 2.4295
22-1-19 -4.19 -1.38 5.727
23-1-19 -3.4 -1.33 4.522
27-1-19 -3.45 -1.43 4.9335
28-1-19 -1.65 -1.33 2.1945
30-1-19 4.1 -0.98 -4.019
(RA-ŘA)(RB-
ŘB)=19.5275
1 n _ _
Variance = ――― ∑ ( RA − R A ) (RB-RB)
n t =1

Co-variance(cov AB) = 1
── (19.5275) =0.8172
19
COV AB
Correlation Co.efficient (PAB) = -----------------
(Std.A)(Std.B)

0.8172 0.8172
------------------------------- = ---------------------- =3.104
(2.676)(1.42) 3.799

CORRELATION BETWEEN

53
 GMR INFRASTRUCTURE &IVRLC

Date Dev.of(RA-ŘA) Dev.of(RB-ŘB) Combined deviation

(RA-ŘA) (RB-ŘB)
1-1-19 -0.12 29.84 -3.5808
2-1-19 7.43 40.39 300.1077
5-1-19 5.19 42.04 217.7672
6-1-19 4.03 49.04 197.6312
7-1-19 -5.07 1.49 -7.5543
9-1-19 -10.72 -5.56 59.6032
12-1-19 -1.57 -2.46 3.8622
13-1-19 -6.17 -4.96 2.8272
14-1-19 -0.57 1.46 9.4462
17-1-19 -6.47 3.41 -17.8002
19-1-19 -5.22 -8.96 12.2752
19-1-19 -1.37 -7.19 19.8332
20-1-19 -2.77 -8.71 19.0297
21-1-19 -2.07 -11.96 5.0232
22-1-19 -0.42 -25.96 125.1272
23-1-19 -4.82 29.66 76.2262
27-1-19 -2.57 -22.56 17.3712
28-1-19 -0.77 -19.76 77.4592
30-1-19 -3.92 -10.46 41.0032
(RA-ŘA)(RB-
ŘB)=1119.6447
1 n _ _
Variance = ――― ∑ ( RA − R A ) (RB-RB)
n t =1

Co-variance(cov AB) = 1
── (1119.6447) =58.612
19
COV AB
Correlation Co.efficient (PAB) = -----------------
(Std.A)(Std.B)
58.612 58.612
------------------------------- = ---------------------- =0.531
(4.76) (23.19) 110.384

54
 CORRELATION BETWEEN
AMBUJA CEMENT&KAKATIYA CEMENT

Date Dev.of(RA-ŘA) Dev.of(RB-ŘB) Combined deviation

(RA-ŘA) (RB-ŘB)
1-1-19 -34.35 1.824 -62.6544
2-1-19 -35.4 -0.076 2.6904
5-1-19 -34.85 -0.126 4.3281
6-1-19 -27.6 6.574 -191.4424
7-1-19 -32.55 0.874 -28.4487
9-1-19 -32 0.074 -2.368
12-1-19 -35.4 -0.026 0.9204
13-1-19 -33.25 -1.426 47.4145
14-1-19 33.1 0.224 7.4144
17-1-19 -35.9 0.574 -20.6066
19-1-19 -33.9 -0.826 28.0014
19-1-19 -30.95 1.874 -58.0003
20-1-19 -35.85 -0.326 11.084
21-1-19 -34 -1.126 40.0293
22-1-19 -35.55 -0.176 6.6
23-1-19 -37.5 -1.126 40.08556
27-1-19 -35.6 -3.626 103.1966
28-1-19 -34.1 -3.026 38.6219
30-1-19 -34.3 1.126 -3862
(RA-ŘA) (RB-ŘB)=
23.1439
1 n _ _
Variance = ――― ∑ ( RA − R A ) (RB-RB)
n t =1

Co-variance(cov AB) = 1
── (23.1439) =--1.2191
19
COV AB
Correlation Co.efficient (PAB) = -----------------
(Std.A)(Std.B)

-1.2191 -1.2191
------------------------------- = ---------------------- = -0.012
(43.11) (2.33) 100.4463

55
PORT FOLIO RISK

p = √x1² 1²+x2² 2²+2(x1)(x2)(x12) 1 2

Where x1 = propotion of investment in security 1.

X2 = propotion of investment in security 2.

1 = Standard Deviation of security 1.

2 = Standard Deviation of security 2.

X12= Correlation Co.efficient between security 1&2.

p =Portfolio Risk.

1. Rel. Communication &Bharthi Airtel

X1=0.51 1 =33.47

X2=0.49 2 =34.60 x12= 7.469

p = √x1² 1²+x2² 2²+2(x1)(x2)(x12) 1 2

p = √(0.51) ²(33.47) ²+(1.51) ²(34.60) ²+2(-0.51)(1.51)(7.469)(33.47)(34.60)

p = √(291.37)+(2729.644)-(193.6229)

p =√(2254.65) p = 47.48%

56
 2. Matrix Laboratories Ltd. & Dr.Reddy’s

X1 =0.34 1 =8.21

X2=0.66 2 =19.19 x12 =0.366

p = √x1² 1²+x2² 2²+2(x1)(x2)(x12) 1 2

p = √(0.34) ²(8.21) ²+(0.66) ²(19.19) ²+2(0.34)(0.66)(0.366)(8.21)(19.19)

p = √(7.7919)+(119.3330)+(21.7526)

p =√(142.8775)

p = 11.95%

3.Taj & Hotel Leela

X1= 0.70 1=2.676

X2=0.30 2= 1.42 x12=3.104

p = √x1² 1²+x2² 2²+2(x1)(x2)(x12) 1 2

p = √(0.70) ²(2.676) ²+(0.30) ²(1.42) ²+2(0.70)(0.30)(3.104)(2.676)(1.42)

p = √(3.5084)+(0.6088)+(4.9588)

p =√(9.076)

57
p = 3.01%

58
4.GMR Infrastructure Ltd.&IVRCL

X1=0.87 1=4.76

X2=0.19 2= 23.19 x12=0.531

p = √x1² ²+x2²
1 2²+2(x1)(x2)(x12) 1 2

p = √(0.87) ²(4.76) ²+(0.19) ²(23.19) ²+2(0.87)(0.19)(0.519)(4.76)(23.19)

p = √(17.1495)+(9.0884)+(19.2585)

p =√(39.4964)

p = 6.28%

5.Ambuja &Kakatiya Cement

X1=0.29 1=43.11

X2=0.71 2= 2.33 x12=-0.012

p = √x1² 1 ²+x2² 2²+2(x1)(x2)(x12) 1 2

p = √(00.29) ²(43.11) ²+(0.7) ²(7.203) ²+2(2.33)(0.29)(0.71)(-0.012)(43.11)(2.33)

p = √(0.0841 )(1958.4721)+(0.49)(5.4289)+0.4963

p= √1962.9750+2.6601+0.4963 =√(1966.1914) p

=39.57%

59
 PORTFOLIC WEIGHTS

1. Reliance communication& Bharthi Airtel Formula

Xa = ² b –pab ab
_________________
² a –²b 2 pab ab
Where

Xa =Propotion of investment Reliance Communication.

Xb = Propotion of investment in Bharthi Airtel.

(33.47) ²-(7.489)(34.60)(33.47)
= _______________________________________
(84.60) ²+(33.47) ²-2(7.489)(33.60)(33.47)

1120.2410-8672.7263
_____________________
1197.19+1120.2410-19844.1989

-7552.5214
──────────── xa =0.51
14526.774 xb =10-0.51
xb =0.49

2.Matrix &Dr.Reddy’s
Formua:- Xa = ² b –pab ab
_________________
² a –²b 2 pab ab
Where

Xa =Propotion of investment Matrix.

Xb = Propotion of investment in Dr. Reddy’s

(19.19) ²-(0.366)(67.405)(19.19)
= _______________________________________
(67.405) ²+(19.19) ²-2(0.366)(67.405)(19.19)

266.1769-397.930
_____________________
4543.434+2601769-795.861

-197.7531
──────────── xa =0.34
4007.6589 xb =10-0.34
xb =0.66

60
3. Taj GVK Hotels &Hotel Leela
Formula :-
Xa = ² b –pab ab
_________________
² a –²b 2 pab ab
Where
Xa =Propotion of investment in Taj GVK Hotels
Xb = Propotion of investment in Hotel Leela

(1.42) ²-(3.104)(2.676)(1.42)
= _______________________________________
(2.762) ²+(1.42) ²-2(3.104)(2.767)(1.42)

(2.0194) – (11.794)
= ___________________________
(7.6286) + (2.0194) – 23.5899

-9.7776
____________ Xa =0.70
-19.9449 Xb =1-0.70
Xb =0.30

4 Ambuja Ltd. & Kakatiya Cement.

Formula:-
² b –pab ab
_________________
² a –²b 2 pab ab
Where

Xa =Propotion of investment in Ambuja Ltd.

Xb = Propotion of investment in Andhra Cement.

(2.33) ²-(-0.012) (43.11) (2.33)

= _______________________________________
(43.11)²+(2.33)²-2(0.012)(43.11)(2.33) )
= __________________________
(1958.4721) + (5.4289) + (2.4107)

54287.7947
____________ xa =0.29
1966.3117 xb =1-0.29
xb =0.71%

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5 GMR Infrastructure Ltd. (IVRCL)
Formula:-
² b –pab ab
_________________
² a –²b 2 pab ab
Where

Xa =Propotion of investment in GMR Infrastructure Ltd.

Xb = Propotion of investment in IVRCL.

(23.19) ²-(0.531) (4.76) (23.19)

= _______________________________________
(4.76) ²+(23.19) ²-2(0.531) (4.76)(23.19)

(537.7761) – (58.6141)
= __________________________
(22.6576) + (537.7761) - (117.2282)

479.192
__________ = xa =0.87
117.2282 xb =1-0.87
xb =0.19

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CHAPTER-V
FINDINGS
SUGGESTION
&
CONCLUSION

63
 FINDINGS
The morkowitz realistic determination of portfolio is said to be a productive one
in such a case that a financial specialist is prepared to go for broke at bull he can cast a
ballot the last portfolio y . from the risk oz and rx perspective it's anything but a
proficient portfolioX is a commanded portfolio Y and z is an overwhelming portfolio

At the point when the external purposes of a proficient portfolio are jointed a shell is
framed or a broken egg is framed the shape relies on level of co connection among
securities along these lines the shell is called achievable set , attainable set or opportunity
set it is supposed in light of the fact that all the accessible speculation openings in the
market like either on the outskirt of inside the fringe

According to the count and study, the Reliance correspondence bears an extent of 0.51
and where as Bharthi Airtel bears an extent of 0.49 which is entirely irrelevant of risk
includes in the two organizations the standard deviation of two organizations are 33.47
and 34.60.

In this mix the risk of Bharthi Airtel is not as much as Reliance correspondence i.e.,
14.726<17.26. So financial specialists can put their cash in Bharhi Airtel.

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SUGGESTIONS

a. Indian data line securities pltd individual from BSE, NSE and DP with NSDL. Its
business incorporates securities broking port polio changer administrations.

b. The organization determines risks(un precise risks) can be decreased by

enhancing into a couple of organizations having a place with different industry gathering

c. The organization to extend this branches country regions moreover

d. The speculators as don't have the foggiest idea about the advantages of port polio
the executives framework. The organization clarified crafted by port polio the executives
to give best direction for the financial specialist.

e. The risk was to appearances to the port polio the board and the speculator will

f. get the organization confirmation sum.

g. The organization to support of the misfortune it is more advantage of the

speculator

65
 CONCLUSION

If there should be an occurrence of superbly securities or stocks the risk can be decreased
to a base point. If there should arise an occurrence of contrarily related securities the risk
can be decreased to at a Zero( which is organizations risk ) however the risk wins the
equivalent for the security or stock in the portfolio .

In the event of portfolio the board adversely connected resources are generally gainful.
Yet, in the above determined connection coefficient it is that the relationship between's
Taj&GVK and HOTEL LEELA which implies the blend of these portfolios are great at
energy to increase future . financial specialists may put their cash for long haul so as to
gain more benefit.

66
BIBLIOGRAPHY

67
 BIBLIOGRAPHY

BOOKS:

1. Financial management - by I.M.PANDEY

2. Financial management - by MY KHAN PK JAIN
3. Company’s annual report

WEBSITES:
 www.zuaricement.com
 www.yahoofinance.com
 www.google.com

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