This project involved conducting a thorough risk evaluation of three stocks: Apple, Intel, and Kroger. The analysis spanned the period from 2015 to 2020 and encompassed various statistical metrics to assess each stock's performance and suitability for investment.
- Kroger, a consumer staples stock, exhibited unexpectedly low growth rates despite its high risk profile, contrasting traditional expectations for defensive stocks.
- Apple, belonging to the IT sector, demonstrated higher returns with lower risk compared to Kroger, challenging conventional notions of risk associated with sector-based investments.
- Utilized statistical measures such as arithmetic and geometric means, standard deviation, coefficient of variation, and beta to evaluate risk and return characteristics.
- Conducted hypothesis tests to assess the statistical significance of estimated betas, providing insights into the stocks' systematic risk relative to the market.
Apple emerged as the recommended stock for the investment portfolio due to its higher returns and relatively lower risk-to-return ratio compared to Intel and Kroger. Despite its volatility, Apple demonstrated resilience during adverse market conditions, making it an attractive long-term investment option.
Acknowledged potential caveats, such as Apple's pricing strategy potentially limiting future sales growth, and the inherent uncertainty in predicting individual stock returns based on historical data.
- Descriptive statistics, coefficients, and hypothesis testing results are presented for each stock, including estimates of beta and their significance levels.
- The Capital Asset Pricing Model (CAPM) is applied to estimate the systematic risk (beta) of each stock relative to the market.
- Hypothesis tests are conducted to determine whether the estimated betas differ significantly from 1, providing insights into each stock's sensitivity to market movements.
React
Typescript
Django
Laravel
Facebook
Microsoft
Google
Alibaba
D3
Tencent