International Journal of Mechanical Engineering and Technology (IJMET) Volume 8, Issue 12, December 2017, pp. 663 679, Article ID: IJMET_08_12_069 Available online at http://www.iaeme.com/ijmet/issues.asp?jtype=ijmet&vtype=8&itype=12 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 IAEME Publication Scopus Indexed PORTFOLIO MANAGEMENT - RISK & RETURN ANALYSIS OF SELECTED SCRIPTS Dr. V. Sreehari Professor, Department of Management Studies, Vardhaman College of Engineering, Telangana, India G. Ramesh Associate Professor, Department of Management Studies, Vardhaman College of Engineering, Telangana, India G. Vinesh Kumar Assistant Professor, Department of Management Studies Vardhaman College of Engineering, Telangana, India K. Sandeep Kumar Assistant Professor, Department of Management Studies Vardhaman College of Engineering, Telangana, India ABSTRACT Portfolio management is a process of encompassing many activities of investing in assets and securities. It is a dynamic and flexible concept and involves regular and systematic analysis, judgement and action. A combination of securities held together will give a beneficial result if they grouped in a manner to secure higher returns after taking into consideration the risk elements. Key words: Portfolio Management, Return, Risk, Weights, Correlation. Cite this Article: Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar, Portfolio Management - Risk & Return Analysis of Selected Scripts, International Journal of Mechanical Engineering and Technology 8(12), 2017, pp. 663 679. http://www.iaeme.com/ijmet/issues.asp?jtype=ijmet&vtype=8&itype=12 1. INTRODUCTION Portfolios are combinations of assets held by the investors. These combinations may be of various asset classes like equity and debt and of different issuers like Government bond and corporate debt or of various instruments like discount bonds, warrants, debentures and Blue chip equity or scripts of emerging blue chip companies. http://www.iaeme.com/ijmet/index.asp 663 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Portfolio Management is the centralized management of the processes, methods and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on numerous key characteristics. Key capabilities of Portfolio management provides program and project managers in large program/project-driven organizations with the capabilities needed to manage the time, resources, skills and budgets necessary to accomplish all inter-related tasks. The traditional Portfolio Theory aims at the selection of such securities that would fit in well with the asset preferences, need and choice of investor. Modern Portfolio Theory postulates that maximization of return and or minimization of risk will yield optimal returns and choice and attitudes of investors are only a starting point for investment decision and that vigorous risk-return analysis is necessary for optimization of returns. 2. OBJECTIVES OF THE STUDY To analyze the risk return characteristics of sample scripts. To calculate correlation between different stocks. To ascertain portfolio weights. To compute portfolio returns and Risks. To construct effective portfolio to offer maximum return with minimum risks. 3. SCOPE OF THE STUDY The study covers analysis of selected scripts in diversified areas to study average return, standard deviation, correlation among scripts, weights, portfolio risk and portfolio return. 4. METHODOLOGY OF THE STUDY Research methodology is the procedure of collecting, analyzing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimized and the desired level of accuracy can be achieved to arrive at a particular conclusion. 5. SOURCES OF DATA COLLECTION The methodology adopted or employed in this study was mostly on secondary data collection i.e., Companies Annual Reports Information from Internet Information provided by Inter Connected Stock Exchange. 6. LIMITATIONS OF THE STUDY Construction of Portfolio is restricted to two companies. Very few and randomly selected scripts are analyzed from BSE Listings. Data collection was strictly confined to secondary source. No primary data is associated with the project. http://www.iaeme.com/ijmet/index.asp 664 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts 7. DATA ANALYSIS AND INTERPRETATION Rate of Return Rate of Return is calculated by using formula R = Where: R is Rate of Return in percentage D is Dividend P1 is End period stock price P0 is Initial stock price TCS Year (P0) (P1) D (P1-P0) 2016 2656 2352 43.5-304 -9.81 2015 2182 2656 79 474 25.34 2014 1515 2182 32 667 46.14 2013 1221 1515 22 294 25.88 2012 1113 1221 25 108 11.95 AVERAGE RETURN 19.90 BAJAJ AUTO Year (P0) (P1) D (P1-P0) 2016 2135 2597 55 462 24.22 2015 1924 2135 50 211 13.57 2014 1972 1924 50-48 0.10 2013 1799 1972 45 173 12.12 2012 1335 1799 45 464 38.13 AVERAGE RETURN 17.63 HDFC BANK Year (P0) (P1) D (P1-P0) 2016 1052 1206 9.5 154 15.54 2015 676 1052 8 376 56.80 2014 625 676 6.85 51 9.26 2013 518 625 5.5 107 21.72 2012 410 518 4.3 108 27.39 AVERAGE RETURN 26.14 http://www.iaeme.com/ijmet/index.asp 665 editor@iaeme.com
HINDUSTAN UNILEVER Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Year (P0) (P1) D (P1-P0) 2016 888 826 16-62 -5.18 2015 555 888 15 333 62.70 2014 444 555 13 111 27.93 2013 380 444 18.5 64 21.71 2012 282 380 7.5 98 37.41 AVERAGE RETURN 28.91 AMBUJA CEMENT Year (P0) (P1) D (P1-P0) 2016 260 206 2.8-54 -19.69 2015 165 260 5 95 60.61 2014 192 165 3.6-27 -12.19 2013 160 192 3.6 32 22.25 2012 118 160 3.2 42 38.31 AVERAGE RETURN 17.86 Interpretation Average return of Hindustan Unilever (28.91%) is more compared to companies of TCS, Bajaj Auto, HDFC Bank and Ambuja Cement. So, it is safe to invest in Hindustan Unilever to avail greater average return. Standard Deviation Standard Deviation of a portfolio is calculated by using formula Standard Deviation = Variance Variance 2 = 2 Where n is numbers of years R is Return & is Average Return TCS Year Return (R) Average Return( ) ( ( 2 2016-9.81 19.90-29.71 882.62 2015 25.34 19.90 5.44 29.62 2014 46.14 19.90 26.24 688.42 2013 25.88 19.90 5.98 35.75 2012 11.95 19.90-7.95 63.22 TOTAL 1699.64 Variance Variance 2 = 2 = 2 = 339.92 Standard Deviation = Variance = 339.92 = 18.43 http://www.iaeme.com/ijmet/index.asp 666 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts BAJAJ AUTO Variance Year Return (R) Average Return( ) ( ) ( 2 2016 24.22 17.63 6.59 43.43 2015 13.57 17.63-4.06 16.48 2014 0.10 17.63-17.52 307.09 2013 12.12 17.63-5.51 30.33 2012 38.13 17.63 20.50 420.33 TOTAL 817.66 2 = 2 = = 163.53 Standard Deviation = Variance = 163.53 = 12.78 HDFC BANK Variance Year Return (R) Average Return( ) ( ) ( 2 2016 15.54 26.14-10.60 112.37 2015 56.80 26.14 30.66 940.19 2014 9.26 26.14-16.89 285.14 2013 21.72 26.14-4.42 19.57 2012 27.39 26.14 1.25 1.56 TOTAL 1358.83 2 = 2 = = 271.76 Standard Deviation = Variance = 271.76 = 16.48 HINDUSTAN UNILEVER Variance Year Return (R) Average Return( ) ( ) ( 2 2016-5.18 28.91-34.09 1162.44 2015 62.70 28.91 33.79 1141.65 2014 27.93 28.91-0.99 0.97 2013 21.71 28.91-7.20 51.90 2012 37.41 28.91 8.50 72.20 TOTAL 2429.16 2 = 2 = 2429.16) = 485.83 Standard Deviation = Variance = 485.83 = 22.04 AMBUJA CEMENT Variance Year Return (R) Average Return( ) ( ) ( 2 2016-19.69 17.86-37.55 1409.90 2015 60.61 17.86 42.75 1827.54 2014-12.19 17.86-30.04 902.63 2013 22.25 17.86 4.39 19.30 2012 38.31 17.86 20.45 418.15 TOTAL 4577.53 2 = 2 = = 915.50 Standard Deviation = Variance = 915.50 = 30.25 http://www.iaeme.com/ijmet/index.asp 667 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Interpretation Standard Deviation of Bajaj Auto (12.78) is lower compared to companies of TCS, HDFC Bank, Hindustan Unilever and Ambuja Cement. So, it is safe to invest in Bajaj Auto as the deviation is low. Calculation of Correlation Correlation is calculated using Correlation Coefficient Where Correlation Coefficient = Covariance (COV ab) = (R A - A) (R B - B) n is Number of years R A - A is Average Return of Script A R B - B is Average Return of Script B is Standard Deviation of Script A is Standard Deviation of Script B Correlation of TCS with other Companies TCS (R A ) & BAJAJ AUTO (R B ) 2016-29.71 6.59-195.789 2015 5.44-4.06-22.086 2014 26.24-17.52-459.725 2013 5.98-5.51-32.950 2012-7.95 20.50-162.975-873.525 Covariance (COV ab)= (R A - A) (R B - B) = (-873.525) =174.705 σ a = 18.43 ; σ b = 12.78 Correlation Coefficient= = = -0.742 TCS (R A ) & HDFC BANK (R B ) 2016-29.71-10.60 314.926 2015 5.44 30.66 166.790 2014 26.24-16.89-443.194 2013 5.98-4.42-26.432 2012-7.95 1.25-9.938 2.152 Covariance (COV ab) = (R A - A) (R B - B) = (2.152) = 0.430 σ a = 18.43; σ b = 16.48 Correlation Coefficient = = = 0.001 http://www.iaeme.com/ijmet/index.asp 668 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts TCS (R A ) & Hindustan Unilever (R B ) 2016-29.71-34.09 1012.814 2015 5.44 33.79 183.818 2014 26.24-0.99-25.978 2013 5.98-7.20-43.056 2012-7.95 8.50-67.575 1060.023 Covariance (COV ab) = (R A - A) (R B - B) = (1060.023) = 212.005 σ a =18.43; b = 22.04 Correlation Coefficient= = = 0.522 TCS (R A ) & AMBUJA CEMENT (R B ) 2016-29.71-37.55 1115.611 2015 5.44 42.75 232.560 2014 26.24-30.04-788.250 2013 5.98 4.39 26.252 2012-7.95 20.45-162.578 423.595 Covariance (COV ab) = (R A - A) (R B - B) = (423.595) = 84.719 σ a = 18.43; σ b = 30.25 Correlation Coefficient= = = 0.152 Correlation of Bajaj Auto with other Companies BAJAJ AUTO (R A ) & HDFC BANK (R B ) 2016 6.59-10.60-69.854 2015-4.06 30.66-124.480 2014-17.52-16.89 295.913 2013-5.51-4.42 24.354 2012 20.50 1.25 25.625 151.558 Covariance (COV ab) = (R A - A) (R B - B) = (151.558) = 30.312 σ a = 12.78; b = 16.48 Correlation Coefficient= = = 0.144 http://www.iaeme.com/ijmet/index.asp 669 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar BAJAJ AUTO (R A ) & HINDUSTAN UNILEVER (R B ) 2016 6.59-34.09-224.653 2015-4.06 33.79-137.187 2014-17.52-0.99 17.345 2013-5.51-7.20 39.672 2012 20.50 8.50 174.250-130.573 Covariance (COV ab) = (R A - A) (R B - B) = (-130.573) = -26.115 σ a = 12.78; b = 22.04 Correlation Coefficient= = = -0.093 BAJAJ AUTO (R A ) & AMBUJA CEMENT (R B ) 2016 6.59-37.55-247.455 2015-4.06 42.75-173.565 2014-17.52-30.04 526.301 2013-5.51 4.39-24.189 2012 20.50 20.45 419.225 500.317 Covariance (COV ab) = (R A - A) (R B - B) = (500.317) = 100.063 σ a = 12.78; σ b = 30.25 Correlation Coefficient = = = 0.259 Correlation of HDFC Bank with other Companies HDFC BANK (R A ) &HINDUSTAN UNILEVER (R B ) 2016-10.60-34.09 361.354 2015 30.66 33.79 1036.001 2014-16.89-0.99 16.721 2013-4.42-7.20 31.824 2012 1.25 8.50 10.625 1456.525 Covariance (COV ab) = (R A - A) (R B - B) = (1456.525) = 291.305 σ a = 16.48; b = 22.04 Correlation Coefficient = = = 0.802 http://www.iaeme.com/ijmet/index.asp 670 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts HDFC BANK (R A ) & AMBUJA CEMENT (R B ) 2016-10.60-37.55 398.030 2015 30.66 42.75 1310.715 2014-16.89-30.04 507.376 2013-4.42 4.39-19.404 2012 1.25 20.45 25.563 2222.280 Covariance (COV ab) = (R A - A) (R B - B) = (2222.280) = 444.456 σ a = 16.48; σ b = 30.25 Correlation Coefficient = = = 0.892 Correlation of Hindustan Unilever with other Companies HINDUSTAN UNILEVER (R A ) & AMBUJA CEMENT (R B ) 2016-34.09-37.55 1280.080 2015 33.79 42.75 1444.523 2014-0.99-30.04 29.740 2013-7.20 4.39-31.608 2012 8.50 20.45 173.825 2896.560 Covariance (COV ab) = (R A - A) (R B - B) = (2896.560) = 579.312 σ a = 22.04; σ b = 30.25 Correlation Coefficient = = = 0.869 Interpretation The Correlation between HDFC Bank and Ambuja cement is good compared to relation between other companies. 8. CALCULATION OF PORTFOLIO WEIGHTS Portfolio weights are calculated using the formula W b = 1-W a Where W a is Weight of Portfolio a W b is Weight of Portfolio b σ a is Standard Deviation of Script a σ b is Standard Deviation of Script b n ab is Correlation coefficient of Script a and b http://www.iaeme.com/ijmet/index.asp 671 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Calculation of Weights of TCS with other Companies TCS (W a ) & BAJAJ AUTO (W b ) σa = 18.43, σb = 12.78, n ab = -0.742 = 0.396 W b = 1 (0.396) = 0.604 TCS (W a ) & HDFC BANK (W b ) = σa = 18.43, σb= 16.48, n ab = 0.001 0.444 W b = 1 - (0.444) = 0.556 TCS (W a ) & HINDUSTAN UNILEVER (W b ) = 0.682 W b = 1 (0.682) = 0.318 σa = 18.43, σb= 22.04, n ab = 0.522 TCS (W a ) & AMBUJA CEMENT (W b ) = 0.765 W b = 1 (0.765) = 0.235 σa = 18.43, σb= 30.25, n ab = 0.152 Calculation of Weights of Bajaj Auto with other Companies BAJAJ AUTO (W a ) & HDFC BANK (W b ) = 0.645 W b = 1 (0.645) = 0.355 σa= 12.78, σb= 16.48, n ab = 0.144 http://www.iaeme.com/ijmet/index.asp 672 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts BAJAJ AUTO (W a ) & HINDUSTAN UNILEVER (W b ) = σa = 12.78, σb = 22.04, n ab = -0.093 0.730 W b = 1 (0.730) = 0.270 BAJAJ AUTO (W a ) & AMBUJA CEMENT (W b ) = 0.928 W b = 1 (0.928) = 0.072 σa = 12.78, σb = 30.25, n ab = 0.259 Calculation of Weights of HDFC Bank with other Companies HDFC BANK (W a ) & HINDUSTAN UNILEVER (W b ) = 1.113 σa = 16.48, σb = 22.04, n ab = 0.802 W b = 1 (1.113) = -0.113 HDFC BANK (W a ) & AMBUJA CEMENT (W b ) = 1.582 W b = 1 (1.582) = -0.582 σa = 16.48, σb= 30.25, n ab = 0.892 Calculation of Weights of Hindustan Unilever with other Companies HINDUSTAN UNILEVER (W a ) & AMBUJA CEMENT (W b ) = 1.387 W b = 1 (1.387) = -0.387 σa = 22.04, σb= 30.25, n ab = 0.869 Interpretation Among all the scripts the weights of TCS & Bajaj Auto (0.396 & 0.604) and TCS &HDFCBank(0.444 & 0.556) are good compared to all the companies. http://www.iaeme.com/ijmet/index.asp 673 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar 9. CALCULATION OF PORTFOLIO RISK Portfolio risk is calculated using the formula R P = (σ a *W a ) 2 + (σ b *W b ) 2 + 2* σ a * σ b *W a *W b *n ab Where R p is portfolio Risk σ a is Standard Deviation of Script a σ b is Standard Deviation of Script b W a is Weight of script a W b is Weight of script b n ab is Correlation coefficient of script a & b Calculation of Portfolio Risk of TCS with other Companies TCS (a) & BAJAJ AUTO (b): σ a = 18.43, σ b = 12.78, 0.396, W b = 0.604,n ab = -0.742 R P = (18.43*0.396) 2 +(12.78*0.604) 2 +2(18.43)*(12.78)*(0.396)*(0.604)*(-0.742) R P = 5.408 TCS (a) & HDFC BANK (b): σ a = 18.43, σ b = 16.48, 0.444, W b = 0.556, n ab = 0.001 R P = (18.43*0.444) 2 +(12.78*0.604) 2 +2(18.43)*(16.48)*(0.444)*(0.556)*(0.001) R P = 12.291 TCS (a) &HINDUSTAN UNILEVER (b): σ a = 18.43, σ b = 22.04, 0.682, W b = 0.318, n ab = 0.522 R P = (18.43*0.682) 2 +(22.04*0.318) 2 +2(18.43)*(22.04)*(0.682)*(0.318)*(0.001) R P = 17.294 TCS (a) & AMBUJA CEMENT (b): σ a = 18.43, σ b = 30.25, 0.765, W b = 0.235, n ab = 0.152 R P =(18.43*0.765) 2 +(30.25*0.235) 2 +2(18.43)(30.25)(0.765)(0.235)(0.152) R P = 16.727 Calculation of Portfolio Risk of Bajaj Auto with other Companies BAJAJ AUTO (a) & HDFC BANK (b): σ a = 12.78, σ b = 16.48, 0. 645, W b = 0.355, n ab = 0.144 R P = (12.78*0.645) 2 + (16.48*.355) 2 +2(12.78)(16.48)(0.645)(0.355)(0.144) R P = 10.773 http://www.iaeme.com/ijmet/index.asp 674 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts BAJAJ AUTO (a) &HINDUSTAN UNILEVER (b): σ a = 12.78, σ b = 22.04, 0. 730, W b = 0.270, n ab = -0.093 R P =(12.78*0.73) 2 + (22.04*.27) 2 +2(12.78)(22.04)(0.73)(0.27)(-0.093) R P = 10.589 BAJAJ AUTO (a) & AMBUJA CEMENT (b): σ a = 12.78, σ b = 30.25, 0. 928, W b = 0.072, n ab = 0.259 R P = (12.78*0.928) 2 +(30.25*0.072) 2 +2(12.78)(30.25)(0.928)(0.072)(0.259) R P = 12.601 Calculation of Portfolio Risk of HDFC Bank with other Companies HDFC BANK (a) & HINDUSTAN UNILEVER (b): σ a = 16.48, σ b = 22.04, 1.113, W b = -0.113, n ab = 0.802 R p = (16.48*1.113) 2 +(22.04*(-0.113)) 2 +2(16.48)*(22.04)(1.113)(-0.113)(0.802) R P = 16.412 HDFC BANK (a) & AMBUJA CEMENT (b): σ a = 16.48, σ b = 30.25, 1.582, W b = -0.582, n ab = 0.892 R p = (16.48*1.582) 2 +(30.25*(-0.582)) 2 +2(16.48)(30.25)(1.582)(-0.582)(0.892) R P = 13.07 Calculation of Portfolio Risk of Hindustan Unilever with other Companies σ a = 22.04, σ b = 30.25, 1.387, W b = -0.387, n ab = 0.869 R p = (22.04*1.387) 2 +(30.25*(-0.387)) 2 +2(22.04)(30.25)(1.387)(-0.387)(0.869) R P = 21.203 Interpretation Among all the companies Risk is low for TCS & Bajaj Auto (5.408). So, it is safe to invest in TCS & Bajaj Auto as the risk is low compared to all other companies. 10. CALCULATION OF PORTFOLIO RETURNS Portfolio Return is calculated using the formula Where R p is Portfolio return R A is Return of Script A R B is Return of Script B W A is Weight of Script A W B is Weight of Script B R p =(R A *W A ) + (R B *W B ) http://www.iaeme.com/ijmet/index.asp 675 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Calculation of Portfolio Return of TCS with other Companies TCS (A) & BAJAJ AUTO (B): R A = 19.90, R B = 17.63, W A = 0.396, W B = 0.604 R p = (19.90*0.396) + (17.63*0.604) = 18.529 TCS (A) & HDFC BANK (B): R A = 19.90, R B = 26.14, W A = 0.444, W B = 0.556 R p = (19.90*0.444) + (26.14*0.556) = 23.369 TCS (A) & HINDUSTAN UNILEVER (B): R A = 19.90, R B = 28.91, W A = 0.682, W B = 0.318 R p = (19.90*0.682) + (28.91*0.318) = 22.765 TCS (A) & AMBUJA CEMENT (B): R A = 19.90, R B = 17.86, W A = 0.765, W B = 0.235 R p = (19.90*0.765) + (17.86*0.235) = 19.421 Calculation of Portfolio Return of Bajaj Auto with other Companies BAJAJ AUTO (A) & HDFC BANK (B): R A = 17.63, R B = 26.14, W A = 0.645, W B = 0.355 R p = (17.63*0.645) + (26.14*0.355) = 20.651 BAJAJ AUTO (A) & HINDUSTAN UNILEVER (B): R A = 17.63, R B = 28.91, W A = 0.730, W B = 0.270 R p = (17.63*0.730) + (28.91*0.270) = 20.676 BAJAJ AUTO (A) & AMBUJA CEMENT (B): R A = 17.63, R B = 17.86, W A = 0.928, W B = 0.072 R p = (17.63*0.928) + (17.86*0.072) = 17.647 Calculation of Portfolio Return of HDFC Bank with other Companies HDFC BANK (A) & HINDUSTAN UNILEVER (B): R A = 26.14, R B = 28.91, W A =1.113, W B = -0.113 R p = (26.14*1.113) + (28.91*(-0.113)) = 25.827 HDFC BANK (A) & AMBUJA CEMENT (B): R A = 26.14, R B = 17.86, W A =1.582,W B = -0.582 R p = (26.14*1.582) + (17.86*(-0.582)) = 30.959 Calculation of Portfolio Return of Hindustan Unilever with other Companies HINDUSTAN UNILEVER (A) & AMBUJA CEMENT (B): R A = 28.91, R B = 17.86, W A =1.387 W B = -0.387 R p = (28.91*1.387) + (17.86*(-0.387)) = 33.186 Interpretation Return is more in Hindustan Unilever & Ambuja cement (33.186) compared to all other companies. So, it is safe to invest in Hindustan Unilever & Ambuja cement to gain more returns. http://www.iaeme.com/ijmet/index.asp 676 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts Comparative Return & Risk of Selected Scripts Portfolio Return & Risk For Scripts a & b Portfolio Risk Portfolio Return TCS & Bajaj Auto 5.408 18.529 TCS & HDFC Bank 12.291 23.369 TCS & Hindustan Unilever 17.294 22.765 TCS & Ambuja Cement 16.727 19.421 Bajaj Auto & HDFC Bank 10.773 20.651 Bajaj Auto & Hindustan Unilever 10.589 20.676 Bajaj Auto & Ambuja Cement 12.601 17.647 HDFC Bank & Hindustan Unilever 16.412 25.827 HDFC Bank & Ambuja Cement 13.07 30.959 Hindustan Unilever & Ambuja Cement 21.203 33.186 Interpretation Among all the companies HDFC Bank & Ambuja cement has less risk & higher return. So, it is safe to invest in HDFC Bank & Ambuja cement in order to gain more Returns with less Risk. 11. FINDINGS Individual returns on the selected stocks of TCS, BAJAJ AUTO, HDFC Bank, Hindustan Unilever & AMBUJA CEMENT are 19.90%, 17.63%, 26.14%, 28.91% and 17.86% respectively. Individual risks on the selected stocks including TCS, BAJAJ AUTO, HDFC Bank, Hindustan Unilever & AMBUJA CEMENT are 18.43%, 12.78%, 16.48%, 22.04% and 30.25% respectively Correlation between all the companies is positive except TCS & Bajaj Auto Stocks and Hindustan Unilever & BAJAJ AUTO stocks which means most of the combinations of portfolios are at good position to gain in future. Weights of TCS & Bajaj Auto (0.396,0.604), TCS & HDFC (0.444,0.556), TCS & Hindustan Unilever (0.682,0.318),TCS & Ambuja Cement (0.765,0.235), Bajaj Auto & HDFC Bank (0.645,0.355), Bajaj Auto & Hindustan Unilever (0.73,0.27), Bajaj Auto & Ambuja cement (0.928,0.072) are positive compared to HDFC Bank & Hindustan Unilever (1.113,-0.113), HDFC Bank & Ambuja Cement(1.582,-0.582), Hindustan Unilever & Ambuja Cement (1.387,-0.387) are negative. The weight of Scripts are based on the percentage of weights invested. Portfolios returns of Hindustan Unilever & Ambuja Cement(33.186%) followed by HDFC Bank & Ambuja Cement (30.959%), HDFC Bank & Hindustan Unilever (25.827%) TCS and HDFC Bank (23.369%) stood on the top while Portfolio Returns of Bajaj Auto & Ambuja Cement (17.647%) is the only combination which stood at the bottom with minimum profits. Portfolios risk of Hindustan Unilever & Ambuja Cement (21.203%) and TCS & Hindustan Unilever (17.294%) are very high compared to others while Portfolio risk of TCS & Bajaj Auto (5.408%) stood at the bottom. 12. SUGGESTIONS Of the five stocks selected, all the stocks have given positive returns. HDFC Bank and HUL has been giving good profits of over 25% while the other companies have also given good returns. All the companies seem to be a good bet for investment. http://www.iaeme.com/ijmet/index.asp 677 editor@iaeme.com
Dr. V. Sreehari, G. Ramesh, G. Vinesh Kumar and K. Sandeep Kumar Comparing the individual risks, HUL and AMBUJA CEMENT are high risky compared to the other securities like BAJAJ AUTO, and HDFC and it is suggested that the investors should be careful while investing in high risk securities. The investors who require average returns with low risk can invest in Hindustan Unilever Investors are advised to invest in Portfolios of Ambuja Cements & Hindustan Unilever (33%) and Ambuja Cements & HDFC Bank (31%) which have given the maximum returns. Low Risk investors are advised to keep away from HUL & AMBUJA CEMENT and Hindustan Unilever & HDFC Bank and prefer the Portfolios of Bajaj Auto with other companies which have the least risk. 13. CONCLUSIONS The main objective of the Portfolio management is to help the investors to make wise choice between alternate investments without a post trading shares. Any portfolio management must specify the objectives like maximum returns, optimum Returns, capital appreciation, safety etc., in the same prospectus. This service renders optimum returns to the investors by proper selection and continuous shifting of portfolio from one scheme to another scheme of from one plan to another plan within the same scheme. Greater portfolio return with less risk is always is an attractive combination for the investors. REFERENCES [1] Punithavathy Pandian (2009), Security Analysis and Portfolio Management, Vikas Publishing House Private Limited, New Delhi. [2] S. Kevin (2009), Security Analysis and Portfolio Management, Prentice Hall of India, New Delhi. [3] Donald E. Fischer, Ronald J. Jordan (2009), Security Analysis and Portfolio Management, Prentice Hall of India, New Delhi. [4] Prasanna Chandra (2009), Investment Analysis and Portfolio Management, Tata McGraw Hill, New Delhi. [5] S. Raghavan and Dr. M. Selvam, Determinants of Foreign Portfolio Investment and Their Effects on The Indian Stock Market. International Journal of Management, 8(3), 2017, pp. 105 115. [6] Hasanudin, Sugeng Wahyudi, Irene Rini Demi Pangestuti., Managing The Pension Fund To Improve Portfolio Performance: An Empirical Study On Employer Pension Funds In Indonesia, International Journal of Civil Engineering and Technology, 8(8), 2017, pp. 714 723. [7] Dr. Vani Kamath and Dr. Roopali Patil, Cost Benefit Analysis of National Pension Scheme. International Journal of Management, 8 (3), 2017, pp.156-158. [8] Dr. Varsha Nerlekar and Swapnil Patel, An Empirical Analysis of Inventory Efficiency of Major Refineries in India. International Journal of Management, 7(7), 2016, pp. 426 432. [9] A. Ramaraju, Impact of FDI On Stock Market Development: An Empirical Investigation, International Journal of Management, Volume 2, Number 1, Jan- April (2011) [10] Benefits of FDI In Indian Retail Sector and Custome r Perception of Organized Retail Outlets In Hyderabad, K.Venkateswara Raju, Dr. Svss Srinivasa Raju, Dr. D.Prasanna Kumar, International Journal of Management, Volume 4, Issue 4, July-August (2013), pp. 180-192 http://www.iaeme.com/ijmet/index.asp 678 editor@iaeme.com
Portfolio Management - Risk & Return Analysis of Selected Scripts [11] http://indiainfoline.com [12] http://bloomberg.com [13] http://moneycontrol.com/nifty/nse [14] http://moneycontrol.com/sensex/bse [15] http://scribd.com [16] http://economictimes.indiatimes.com [17] http://profit.ndtv.com [18] http://money.rediff.com http://www.iaeme.com/ijmet/index.asp 679 editor@iaeme.com