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Compare two different public company stocks during the last two month, and determinate the risk and...

Compare two different public company stocks during the last two month, and determinate the risk and returns?

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Expert Solution

Let us take two public company stocks in India

1.State Bank of India ( SBI )

2.Punjab National Bank ( PNB )

opening Price (Rs) (May 1st) Closing Price( Rs) (June 28th) Return for 2 months

SBI 308.15 361.25 (361.25-308.15)/308.15 = 17.23%

PNB 86.1 79.55 (79.55-86.1)/86.1 = -7.6%

If we Calculate based on Daily adjusted prices for 2 months from (1st may to 28th June) taken from stock exchange

SBI PNB

Average of Daily Returns 0.004 -0.00125

Variance 0.000384 0.000677

Standard Deviation(Risk) 0.0196 0.026

Return for 2 Months 0.1723 -0.076

Return per Unit risk 8.79 -2.92

Volume traded 123.67 lakhs 104.53 lakhs

Based on above analysis SBI stock has high return and also high return per risk compared to PNB stock.The volatality of PNB is also higher than the SBI stock ,hence it is more risky compared to SBI stock.If we take the return for 2 months also SBI is better performing stock than PNB and also volume traded of SBI stock is more than PNB. Hence it is better to invest in SBI stock than PNB stock based on above analysis.  

jeff jeffy answered 9 months ago
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