INTRODUCTION

Portfolio management or investment helps investors in effective and efficient

management of their investment to achieve this goal.

The rapid growth of capital markets in India has opened up new investment avenues for
investors.

The stock markets have become attractive investment options for the common man.

But the need is to be able to effectively and efficiently manage investments in order to
keep maximum returns with minimum risk.

Hence this study on “PORTFOLIO MANAGEMENT” to examine the role process and
merits of effective investment management and decision.

 Portfolio management is the management of various financial assets which comprise the
portfolio. Portfolio management is a decision – support system that is designed with a view
to meet the multi-faced needs of investors According to Securities and Exchange Board of
India Portfolio Management is defined as

 PORTFOLIO means the total holdings of securities belonging to any person.

 PORTFOLIO MANAGER any person who pursuant to a contract or arrangement with a

client, advises or directs or undertakes on behalf of the client (whether as a discretionary
portfolio manager to otherwise) the management or administration of a portfolio of securities or
the funds of the client.
IMPORTANCE OF THE STUDY

Planning plays a pivotal role in Financial Investment. Don’t just invest just for the sake of
investing. Understand why you really need to invest money? Investing just because your friend
has said you to do so is foolish. Careful analysis and focused approach are mandatory before
investing.

Explore all the investment plans available in the market. Go through the pros and cons of
each plan in detail. Analyze the risk factors carefully before finalizing the plan. Invest in
something which will give you the maximum return.

Appoint a good financial planning manager who takes care of all your investment needs.
He must understand your requirement, family income, stability etc to decide the best plan for
you.

One needs to be a little careful and sensible while investing. An individual must read the
documents carefully before investing.

NEED FOR THE STUDY

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

and securities. It is a dynamic and flexible concept and involves regular and systematic analysis,
judgment and action. The objective of this service is to help the unknown and investors with the
expertise of professionals in investment portfolio management. It involves construction of a
portfolio based upon the investor’s objectives, constraints, preferences for risk and returns and
tax liability. The portfolio is reviewed and adjusted from time to time in tune with the market
conditions. The evaluation of portfolio is to be done in terms of targets set for risk and returns.
The changes in the portfolio are to be effected to meet the changing condition.

The modern theory is the view that by diversification risk can be reduced. Diversification
can be made by the investor either by having a large number of shares of companies in different
regions, in different industries or those producing different types of product lines. Modern theory
believes in the perspective of combination of securities under constraints of risk and returns.
  To maintain stability in the market demand and supply.

 To examine and determine the business recession.

 To examine the causes of fluctuations in the interest rates.

 To maintain a stability of prices to eradicate inflations rate and deflation rate.

 Identification of the investor’s objectives, constraints and preferences

 Review and monitoring of the performance of the portfolio.

 Finally the evaluation of the portfolio

OBJECTIVES OF THE STUDY

The main objective of investment portfolio management is as follows:

1. To study in Unicon Investment Solutions

2. To study the investment decision process.
3. To analyze the risk return characteristics of sample scripts.
4. Ascertain portfolio weights of investments
5. To construct an effective portfolio mix which offers the maximum return for minimum
risk?
SCOPE OF THE STUDY

The scope of the study likes within the purview of risk return portfolio. Analysis of four
companies i.e. Aditya Birla groups, Bajaj Alliance, ACC cements Ltd. And Hero Corporation
ltd.

RESEARCH METHODOLOGY

Data was also gathered from Primary and Secondary sources like the books and internet sites of
the various companies. The data from the internet sites was collected in the month of May 2015
so there might be some modification of the data presently.

There are two research methods namely:

The study uses extensively both primary and secondary data

PRIMARY DATA:

 Information was collected through this source comprises of discussions with the
personnel securities of the management.
 Company analysis by Graphical representations of data through statistical tools and
interpreting them.
 Comparing data of two companies and analyzing them.

SECONDARY DATA:

 The secondary data includes information obtained from various sources that includes
newspaper articles, business magazines and websites.
 Secondary data collected from different books.
 It is collected from Organizations official sites.
LIMITATIONS OF THE STUDY

 The data collection is basically confined to secondary sources, with very little amount of
primary data associated with the project.

 Only selected companies are considered for analysis.

 The stock prices of only NSE (Nifty) and BSE (Bombay stock exchange) are examined.

 Only Systematic risk is analyzed but not unsystematic risk.

 The time duration of the project will be of 45 day.

 INDUSTRY PROFILE

Capital markets in India have considerable depth. There are 22 stock exchanges in India.
Ahmadabad, Delhi, Calcutta, Madras and Bangalore are major ones amongst the other stock
exchanges. These stock exchanges are served by 3,000 brokers and 20,000 sub-brokers. A
number of providers for merchant banking services exist.

The market capitalization of the Bombay Stock Exchange (BSE) alone was around Rs.5
trillion in December 1994.This makes it one of the largest emerging stock markets in the world.
A number of other cities also have stock markets.

There are two other exchanges in Bombay:-

 National Stock Exchange (NSE)

 Over The Counter Exchange of India (OTCEI)

The regulatory agency which oversees the functioning of stock markets is the Securities
and Exchange Board of India (SEBI), which is also located in Bombay.

India has one of the most active primary markets in the world, with roughly 130 public
issues taking place each month.

The National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and OTCEI have
already introduced screen-based trading. All other exchanges (except Guwahati, Magadha and
Bhubaneswar) are to introduce full computerization and screen-based trading by 30 June 1996.
This will bring about greater transparency for investors, reduce spreads, allow for more effective
monitoring of prices and volumes and speed up settlement.
NATIONAL STOCK EXCHANGE OF INDIA (NSE)

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment
in June 1994. The Capital Market (Equities) segment commenced operations in November 1994
and operations in Derivatives segment commenced in June 2000

Currently, 200 large companies are traded on the NSE; that list is expected to gradually
expand as the exchange stabilizes. The NSE is a computerized market for debt and equity
instruments.

The NSE, located in Bombay, was set up in 1993 to encourage stock exchange reform
through system modernization and competition. NSE's reach has been extended to 21 cities, of
which 6 cities do not have their own stock exchanges. NSE plans to cover 40 cities by end-1996.
The NSE has a very modern implementation of trading using contemporary technology in
computers and communication. It is an electronic screen based system where members have
equal opportunity and access for trading irrespective of their location, since they are connected
by a satellite network.

The number of members trading on the exchange has increased from the 227 at
commencement to 600 members as of November 1995. NSE, thus, helps to integrate the national
market and provides a modern system with a complete audit trail of all transactions. In a further
effort to improve the settlement system and minimize the risks associated therein, NSE has set up
a subsidiary - National Securities Clearing Corporation (NSCC). On par with clearing
corporations the world over, NSCC will shortly guarantee settlement of trades executed and
settled through it. The instruments traded are treasury bills, government security, and bonds
issued by public sector companies.
 The government of India issues around Rs.70 billion of debt instruments per year. The
market is still nascent; but, trading volumes are steadily rising. Average daily turnover in stocks
have increased from Rs.70 million in November 1994 to Rs.990 million during July 1995.

OBJECTIVES:

1. To establish a nationwide trading facility for equities, debt instruments and hybrids.

a. To ensure equal access to investors all over the country through appropriate
communication network.
b. To provide a fair, efficient and transparent securities market to investors using an
electronic communication network.
c. To enable shorter settlement cycle and book entry settlement system.
d. To meet current international standards of securities market.

PROMOTERS

 Industrial Development Bank of India (IDBI)

 Industrial Credit and Investment Corporation of India (ICICI)
 Industrial Financing Corporation of India (IFCI)
 Life Insurance Corporation of India (LIC)
 State Bank of India (SBI)
 General Insurance Corporation (GIC)
 Bank of Baroda
 Canara Bank
 Corporation Bank
 Indian Bank
 Oriental Bank of Commerce
 Union Bank of India
 Punjab National Bank
 Infrastructure Leasing and Financial Services
 Stock Holding Corporation of India
 SBI capital market
NSE-NIFTY

The national Stock Exchange on April 22, 1996 launched a new Equity Index. The NSE-
50. The new Index which replaces the existing NSE-100 Index is expected to serve as an
appropriate Index for the new segment of futures and options. “Nifty” means National Index for
Fifty Stocks.

The NSE-50 comprises 50 companies that represent 20 broad Industry groups with an
aggregate market capitalization of around Rs.170000crores. All companies included in the index
have a market capitalization in excess of Rs.500crores each and should have traded for 85% of
trading days at an impact cost of less than 1.5%.

The base period for the index is the close of prices on Nov 3, 1995 which makes one year
of completion of operation of NSE’s capital market segment. The base value of the Index has
been set at 1000.

BOMBAY STOCK EXCHANGE

The Stock Exchange, Mumbai, Popularly as “Bombay Stock Exchange” (BSE) was
established in 1875 as The Native Share and Stock Brokers Association”, as a voluntary non-
profit making association. It has evolved over the year into its present status as the premier Stock
Exchange in the country. It may be noted that the Bombay Stock Exchange is the oldest one in
Asia, even older than the Tokyo Stock Exchange, which was founded in 1878.

The Bombay Stock Exchange, while providing an efficient and transparent market for the
trading in securities, upholds the interests of the investors and ensures redresses of their
grievances, whether against the companies or its own member-brokers. It also strives to educate
and enlighten the investors by making available necessary informative inputs and conducting
investor education programs.

A Government Board comprising of 9 elected Directors (one third of them retire every
year by rotation), Two SEBI Nominees, Seven Public representatives and an Executive Director
is the Apex Body, which decides the policies and regulates the affairs of the Bombay Stock
Exchange. The executive Director as the Chief Executive Officer is responsible for the day-to-
day administration of the Bombay Stock exchange.
SECURITIES TRADED:

The securities traded in the BSE are classified in to three group’s namely specified
shares of ‘A’ group and non-specified securities. The latter is sub-divided into ‘B1’ and ‘B’
groups. ‘A’ group contains the companies with large outstanding shares, good track record and
large volumes of business in the secondary market. Settlements of all the shares are carried out
through the Clearing House.

Number of Market Annual Average Daily

Year Listed Capitalization Turnover Turnover

Companies (In Crores) (In Crores) (Rs. In Billion)

1994-95 4702 7355 677 1.8

1995-96 5602 5365 501 2.2

1996-97 5832 4639 1243 5.2

1997-98 5853 5630 2706 8.5

2000-03 6000 5479 2449 11.5

In order to enable the market participants, analysts etc., to track the various ups and
downs in the Indian Stock Market, the Exchange has introduced in 1986 an equity stock index
called BSE-SENSEX that subsequently became the barometer of the moments of the share prices
in the Indian Stock Market. It is a “Market Capitalization-Weighted” index of 30 components.
The base year of SENSEX is 1978-79. The SENSEX is widely reported in both domestic and
international markets through print as well as electronic media.

SENSEX is calculated using a market capitalization weighted method. As per this

methodology, the level of the index reflects the total market value of all 30component stocks
from different industries related to particular base period. The total market value of a company is
determined by multiplying the price of its stock by the number of shares outstanding.
Statisticians call an index of a set of combined variables (such as price and number of shares) a
composite index. An indexed number is used to represent the results of this calculation in order
to make the value easier to work with and track over a time. It is much easier to graph a chart
based on indexed values than one based on actual values.

In practice, the daily calculation of SENSEX is done by dividing the aggregate market of
the 30 Companies in the Index by a number called the Index Divisor. The Divisor is the only link
to the original based period value of the SENSEX. The divisor keeps the index comparable over
a period of time and if the reference point for the entire Index maintenance adjustments.
SENSEX is widely used to describe the mood in the Indian Stock Markets.

Base year average is changed as per the formula:

New Base Year Average =Old Base Year Average * (New Market Value/Old Market
Value)

RECENT DEVELOPMENTS IN INDIAN STOCK MARKET

Many steps have been taken in recent years to reform the Stock Market such as:

 Regulation of Intermediaries.
 Changes in the Management Structure.
 Insistence on Quality Securities.
 Prohibition of Insider Trading.
 Transparency of Accounting Processes.
 Strict supervision of Stock Market Operations.
 Prevention of Price Rigging.
 Encouragement of Market Making.
 Discouragement of Price Manipulations.
 Introduction of Electronic Trading.
 Introducing of Depository System.
 Derivates Trading.
 International Listing.
STOCK EXCHANGES IN INDIA
S.NO NAME OF THE STOCK EXCHANGE YEAR
1 Bombay Stock Exchange. 1875
2 Hyderabad Stock Exchange. 1943
3 Ahmadabad Share & Stock Brokers Association. 1957
4 Calcutta Stock Exchange Association Limited 1957
5 Delhi Stock Exchange Association Limited 1957
6 Madras Stock Exchange Association Limited 1957
7 Indoor Stock Brokers Association. 1958
8 Ban galore Stock Exchange. 1963
9 Cochin Stock Exchange. 1978
10 Pune Stock Exchange Limited 1982
11 U.P Stock Exchange Association Limited 1982
12 Ludhiana Stock Exchange Association Limited 1983
13 Jaipur Stock Exchange Limited 1984
14 Gauhati Stock Exchange Limited 1984
15 Mangalore Stock Exchange Limited. 1985
16 Maghad Stock Exchange Limited, Patna. 1986
17 Bhubaneswar Stock Exchange Limited 1989
18 Over the Counter Exchange of India, Bombay 1989
19 Saurasthra Kutch Stock Exchange Limited 1990
20 Vadodara Stock Exchange Limited 1991
21 Coimbatore Stock Exchange Limited 1991
22 Meerut Stock Exchange Limited 1991
23 National Stock Exchange Limited 1992
24 Integrated Stock Exchange 1999
STOCK EXCHANGES IN WORLD
S.NO COUNTRY INDEX
1. Russia Moscow Times
2. Argentina Mer Val
3. Thailand SET
4. Pakistan Karachi 100
5. Indonesia Jak Comp
6. US NASDAQ
7. Czech Republic PX50
8. Mexico IPC
9. Brazil Bovespa
10. Japan Nikkei 225
11. Malaysia KISE Comp
12. China Shanghai Comp
13. Singapore Straits Times
14. South Korea Seoul Comp
15. Spain Madrid General
16. US S & P 500
17. India SENSEX
18. US Dow Jones
19. Germany Dax
20. Hong Kong Hang Sang
21. Canada S & P TSX Composite
22. India NIFTY
23. UK FTSE 100
24. Australia All Ordinaries
25. France CAC 40
 COMPANY PROFILE

UNICON INVESTMENT SOLUTIONS

UNICON has been founded with the aim of providing world class investing experience to
hitherto underserved investor community. The technology today has made it possible to reach
out to the last person in the financial market and gave him the same level of service which was
available to only the few.

We give personalized premium service with reasonable commissions on the NSF, BSE &
Derivative market through our Equity broking arm Unicon Securities Pvt. Ltd. and Commodities
on NCDEX and MCX through our Commodity broking arm Unicon Commodities Pvt. Ltd. with
our sophisticated technology you can trade through your computer and if you want human touch
you can also deal through our Relationship Managers out of our more than 100 branches spread
across the nation.

We also give personalized services on insurance (Life &General) & Investments (Mutual
Funds &IPO’s) needs, through our Insurance & Investment distribution arm Unicon

Insurance Advisors Pvt. Ltd. Our tailor- made customized solutions are perfect match to
different financial objectives. Our distribution network is backed by in-house back office support
to serve our customers promptly.

MISSION

To create long term value by empowering individual investors through superior financial
services supported by culture based on highest level of teamwork, efficiency and integrity.

VISION

To provide the most useful and ethical Investment Solutions-guided by values driven
approach to growth, client service and employee development.
UNICON INVESTMENT SOLUTIONS

Find it tedious to keep track of markets? Grow your wealth with Unicon PMS The capital
markets today have not only become far more complex in terms of compliances, methodologies,
effects and analysis but also need a constant tracking mechanism. As is the case globally, the
Indian investor has also realized the advantages of seeking professional advice in order to not
only manage but also augment his portfolio.

The Portfolio Management Schemes of the Company offer Discretionary Schemes

(Unicon Optimizer & Unicon Growth) for Individuals, Corporate Bodies, Partnership firms,
Proprietors, Non Resident Indians etc. The Company is registered with SEBI enabling it to
undertake Portfolio Management activities under a specific license.

 The Unicon PMS advantage –

 For any market condition:

Choose from our range of PMS products that are designed to perform in any market
based on your investment objectives.

 Professional Fund Management:

The Schemes, duly approved by SEBI, are managed by a highly competent team
comprising of portfolio managers and equity strategists, backed by a team of fundamental,
technical and derivatives analysts

Personalized Service: Proactive management of your funds by fund manager; backed by a

Central Research team of Analysts and serviced by your dedicated Relationship Manager

Timely Review & Reporting:

Periodic review and rebalancing with timely performance reporting Unicon customers
have the advantage of trading in all the market segments together in the same window, as we
understand the need of transactions to be executed with high speed and reduced time. At the
same time, they have the advantage of having all Advisory Services for Life Insurance, General
Insurance, Mutual Funds and IPO’s also.
 Unicon is a customer focused financial services organization providing a range of
investment solutions to our customers. We work with clients to meet their overall investment
objectives and achieve their financial goals. Our clients have the opportunity to get personalized
services depending on their investment profiles. Our personalized approach enables clients to
achieve their Total Investment Objectives.

MANAGEMENT TEAM:

Mr.Gajendra Nagpal (founder and CEO)

Mr. Ram Gupta (co-founder and president)

Mr. P Narang (chairman for fixed assets group)

Mr.Sandeep Arora (Chief Operation Manager)

Mr. Vijay Chopra (National Head)

OUR PRODUCTS AND SERVICES :

 Equity

 Commodity

 Depository

 Distribution

 NRI Services

 Back Office

 Fixed Income

 Investment Banking

 Currency Derivatives

 Portfolio Management
Facilities Offered by Unicon
De-materialization:
You can submit your physical shares at the Unicon branch for dematerialization into
electronic form.
Re-materialization:
You can also request for Re-materialization which enables you to convert the
dematerialized shares into physical form.
* Transfer: Inter and intra depository services are available through which you can transfer
shares.
* IPO: You can apply for IPO using your demat account details and on allotment the securities
are transferred directly to your demat account.
General Insurance
Unicon offers all products of General Insurance under one umbrella. Unicon comprises of
a team of distinguished professionals from insurance, finance and other management disciplines
who have vast business & managerial experience.
Unicon team evaluates the client's business environment and studies the risk profile.
based on the results of these evaluations, Unicon team then suggests the most cost effective ,
integrated insurance package that is perfectly suited to the client's risk profile.
Unicon has a nationwide network of branches all over India, equipped with top quality
infrastructure facilities, to provide you prompt & efficient service.

Life Insurance
Unicon offers you a Peace of Mind by offering various life insurance plans for your
unique & specific needs. Our philosophy is that for every financial problem, there is a solution
also. And we are here to give you complete financial solutions. At the same time we offer you
very Prompt & Reliable Policy related service for enduring relationship.
We offer a very wide range of products to fulfill your particular requirements. You can
always have an access to our 83 Branch Offices situated at prime locations of the city, or you can
call our Relationship Manager to guide on your Investments.
Following is the glimpse of Life Insurance Plans:
 Protection Plans
 Investment Plans
 Child Plans
 Retirement/Pension Plans
 Saving Plans
 NRI Plans
 Health Plans
Unicon is a specialized property broking company. Our highly experienced and professional
teams present retail, office, industrial and residential property opportunities to a broad base of
clients. Whether it is a residential or commercial development, Unicon offers a total solution to
our clients inclusive of market research, marketing strategy, interaction with the professional
teams and sales or leasing of the property.
Unicon’s professional team of consultants will assist you to identify suitable premises
that satisfy your requirements. We will help you negotiate favorable leases and assist with the
preparation of all documentation.

“Whether you are looking for a home or a place to conduct business Unicon shall find you
one”
We provide customer focused transparent investment planning and solutions. We offer
products which benefit your special status. PCG has a specialized advisory team which nurtures
all your investment. We ensure that your investments work for you rather than you for them.
Products offered:

 Unicon Signature Account

 Nifty Tracker
 Unicon Trade Plus
 Unicon Wealth Planner
Unicon offers a unique feature of a single screen trading platform in MCX and NCDEX. Unicon
offers both Offline & Online trading platforms. You can Walk in or place your orders through
telephone at any of our branch locations

Online Commodity Internet trading Platform through UniFlex.

Live Market Watch for commodity market (NCDEX, MCX) in one screen.

1. Add any number of scraps in the Market Watch.

2. Tick by tick live updating of Intraday chart.
3. Greater exposure for trading on the margin available
4. Common window for market watch and order execution.
5. Key board driven short cuts for punching orders quickly.
6. Real time updating of exposure and portfolio.
7. Facility to customize any number of portfolios & watch lists.
8. Market depth, i.e. Best 5 bids and offers, updated live for all scripts.
9. Facility to cancel all pending orders with a single click.
10. Instant trade confirmations.
Unicon offers a unique feature of a single Screen Trading Platform of NSE , BSE &
Derivatives. Unicon offers both Offline & Online trading platforms. You can Walk in or place
your orders through telephone at any of our branch locations
Online Trading Products:
unicon Plus
unicon Swift
unicon Plus
Browser based trading terminal that can be accessed by a unique ID and password. This facility
is available to all our online customers the moment they get registered with us.
unicon Swift
Application based terminal for active traders. It provides better speed, greater analytical features
& priority access to Relationship Managers.
 THEORETICAL FRAME WORK
PORTFOLIO MANAGEMENT

PORTFOLIO:

A portfolio is a collection of securities since it is really desirable to invest the entire funds of an
individual or an institution or a single security, it is essential that every security be viewed in a
portfolio context. Thus it seems logical that the expected return of the portfolio. Portfolio
analysis considers the determine of future risk and return in holding various blends of individual
securities

Portfolio expected return is a weighted average of the expected return of the individual
securities but portfolio variance, in short contrast, can be something reduced portfolio risk is
because risk depends greatly on the co-variance among returns of individual securities.
Portfolios, which are combination of securities, may or may not take on the aggregate
characteristics of their individual parts.

Since portfolios expected return is a weighted average of the expected return of its securities,
the contribution of each security the portfolio’s expected returns depends on its expected returns
and its proportionate share of the initial portfolio’s market value. It follows that an investor who
simply wants the greatest possible expected return should hold one security; the one which is
considered to have a greatest expected return. Very few investors do this, and very few
investment advisors would counsel such an extreme policy instead, investors should diversify,
meaning that their portfolio should include more than one security.

Persons involved in portfolio management:

 Investor :

Are the people who are interested in investing their funds?

 Portfolio managers : Is a person who is in the wake of a contract agreement with a

client, advices or directs or undertakes on behalf of the clients, the management or
distribution or management of the funds of the client as the case may be.
Discretionary portfolio manager :

Means a manager who exercise under a contract relating to a portfolio management

exercise any degree of discretion as to the investment or management of portfolio or securities or
funds of clients as the case may be.

The relationship between an investor and portfolio manager is of a highly interactive nature

The portfolio manager carries out all the transactions pertaining to the investor under
the power of attorney during the last two decades, and increasing complexity was witnessed in
the capital market and its trading procedures in this context a key (uninformed) investor
formed ) investor found himself in a tricky situation , to keep track of market movement ,update
his knowledge, yet stay in the capital market and make money , therefore in looked forward to
resuming help from portfolio manager to do the job for him .

RISK:

Risk is uncertainty of the income /capital appreciation or loss or both. All investments are
risky. The higher the risk taken, the higher is the return. But proper management of risk involves
the right choice of investments whose risks are compensating. The total risks of two companies
may be different and even lower than the risk of a group of two companies if their companies are
offset by each other.

The two major types of risks are:

 Systematic or market related risk.

 Unsystematic or company related risks.

Systematic risks affected from the entire market are (the problems, raw material
availability, tax policy or government policy, inflation risk, interest risk and financial risk). It is
managed by the use of Beta of different company shares.
 The unsystematic risks are mismanagement, increasing inventory, wrong financial policy,
defective marketing etc. this is diversifiable or avoidable because it is possible to eliminate or
diversify away this component of risk to a considerable extent by investing in a large portfolio of
securities. The unsystematic risk stems from inefficiency magnitude of those factors different
form one company to another.

RISK ON PORTFOLIO:

The expected returns from individual securities carry some degree of risk. Risk on the
portfolio is different from the risk on individual securities. The risk is reflected in the variability
of the returns from zero to infinity. Risk of the individual assets or a portfolio is measured by the
variance of its return. The expected return depends on the probability of the returns and their
weighted contribution to the risk of the portfolio. These are two measures of risk in this context
one is the absolute deviation and other standard deviation.

Most investors invest in a portfolio of assets, because as to spread risk by not putting
all eggs in one basket. Hence, what really matters to them is not the risk and return of stocks in
isolation, but the risk and return of the portfolio as a whole. Risk is mainly reduced by
Diversification

RISK RETURN ANALYSIS:

All investment has some risk. Investment in shares of companies has its own risk or
uncertainty; these risks arise out of variability of yields and uncertainty of appreciation or
depreciation of share prices, losses of liquidity etc

The risk over time can be represented by the variance of the returns. While the return
over time is capital appreciation plus payout, divided by the purchase price of the share.
 Normally, the higher the risk that the investor takes, the higher is the return. There is,
however, a risk less return on capital of about 12% which is the bank, rate charged by the R.B.I
or long term, yielded on government securities at around 13% to 14%. This risk less return refers
to lack of variability of return and no uncertainty in the repayment or capital. But other risks such
as loss of liquidity due to parting with money etc., may however remain, but are rewarded by the
total return on the capital. Risk-return is subject to variation and the objectives of the portfolio
manager are to reduce that variability and thus reduce the risk by choosing an appropriate
portfolio.

Traditional approach advocates that one security holds the better, it is according to the
modern approach diversification should not be quantity that should be related to the quality of
scripts which leads to quality of portfolio.

Experience has shown that beyond the certain securities by adding more securities expensive.
Simple diversification reduces:

An asset’s total risk can be divided into systematic plus unsystematic risk, as shown below:

Systematic risk (undiversifiable risk) + unsystematic risk (diversified risk) =Total risk
=Var (r).

Unsystematic risk is that portion of the risk that is unique to the firm (for example, risk
due to strikes and management errors.) Unsystematic risk can be reduced to zero by simple
diversification.

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

portfolio. As the number of randomly selected securities added to a portfolio is increased, the
level of unsystematic risk approaches zero. However market related systematic risk cannot be
reduced by simple diversification. This risk is common to all securities.

Though, equity carries a risk and howsoever much one may desire, the risk can’t be
eliminated. However the risk can certainly be managed (or controlled) with professional
expertise. This professional expertise developed over the long years of operations in financial
markets is being offered by the company. PMS is a dedicated service aimed at managing the
portfolios of the investors who feel the need of professional approach to optimize the returns
from their investments.

Besides its long experience of operating in financial markets. Company offers many other
advantages to its investors. Continuing with its tradition of innovations. Management has
introduced some new features in its PMS as well .These include giving the advantage of its being
a Depository participant to the investor by not charging him for any custodial charges.
Technique’s of portfolio management:

1. Equity portfolio: It is influenced by internal and external factors the internal factors affect
the inner working of the company’s growth plans are analyzed with referenced to
Balance sheet, profit & loss a/c (account) of the company.

Among the external factor are changes in the government policies, Trade cycle’s,
Political stability etc.

2. equity stock analysis: Under this method the probable future value of a share of a
company is determined it can be done by ratio’s of earning per share of the company and
price earnings ratio

EPS == PROFIT AFTER TAX

NO: OF EQUITY SHARES

PRICE EARNING RATIO= MARKET PRICE

E.P.S (earnings per share)

One can estimate trend of earning by EPS, which reflects trends of earning quality of
company, dividend policy, and quality of management.

Price earnings ratio indicate a confidence of market about the company future, a high
rating is preferable.

The following points must be considered by portfolio managers while analyzing the securities.

1. Nature of the industry and its product: long term trends of industries, competition within,
and outside the industry, Technical changes, lab our relations, sensitivity, to Trade cycle.

2. Industrial analysis of prospective earnings, cash flows, working capital, dividends, etc.

3. Ratio analysis: Ratio such as debt equity ratio’s current ratio’s net worth, profit earnings
ratio, returns on investment, is worked out to decide the portfolio.
Prices are based upon demand and supply of the market.

i. Traditional approach assumes that

ii. Objectives are maximization of wealth and minimization of risk.

iii. Diversification reduces risk and volatility.

iv. Variable returns, high illiquidity; etc.

Capital Assets pricing approach (CAPM) it pays more weight age, to risk or portfolio
diversification of portfolio.

The following are the other ancillary objectives:

 Regular return.

 Stable income.

 Appreciation of capital.

 More liquidity.

 Safety of investment.

 Tax benefits.

Portfolio management services helps investors to make a wise choice between alternative
investments with pit any post trading hassle’s this service renders optimum returns to the
investors by proper selection of continuous change of one plan to another plane with in the same
scheme, any portfolio management must specify the objectives like maximum return’s, and risk
capital appreciation, safety etc in their offer.
Returns From the angle of securities can be fixed income securities such as:

(a) Debentures –partly convertibles and non-convertibles debentures debt with tradable

Warrants.

(b) Preference shares

(c) Government securities and bonds

(d) Other debt instruments

(2) Variable income securities

(a) Equity shares

(b) Money market securities like treasury bills commercial papers etc.

Portfolio managers has to decide up on the mix of securities on the basis of contract with the
client and objectives of portfolio
Investors’ philosophy at management is driven by following fundamental Principles.

 Optimal returns

 Focus on risk control

 Effort towards absolute returns

 Stock specific research based approach

 Willing to perform under Rising market, but aiming to outperform in falling market.

 Stock specific selection procedure based on fundamental research for Making sound
investment decisions.

 Focus on disciplines minimizing investment risk by following rigorous Valuation.

 Effort is to enhance absolute returns for investors.

 Belief in serving investors by a disciplined investment approach
 This combines an understanding of the goals and objectives of the investor with a fine
tuned strategy backed by research.
 DATA ANALYSIS AND INTERPRETATION

Analysis of 4 Companies:

 ADITHYA BIRLA GROUPS,

 BAJAJ ALLIANCES,
 ACC CEMENT LTD.,
 HERO CORPORATIONS.

CALCULATION OF AVERAGE RETURNS OF COMPANIES

AVERAGE RETURN = Σ(R)/N

ADITHYA BIRLA GROUPS

Table: 4.1

Opening Share Closing

Year Price (PO) Share Price (P1-P0) (P1-P0)/P0*100

2011-12 1158.75 1090.95 -67.80 -5.85

2012-13 1096.1 916.3 -179.80 -16.4

2013-14 914.95 974.35 59.40 6.49

2014-15 979.65 739.15 -240.50 -24.55

2015-16 743.50 1421.4 677.90 91.18

Total Returns 50.87

(Source: Investment Reports from Unicon investment Solutions)

Average Return = 50.87/5 =10.174

 BAJAJ ALLIANCES LIMITED

Table: 4.2

Opening Share Closing

Year Price (PO) Share Price (P1-P0) (P1-P0)/P0*100

2011-12 222.20 225.15 2.95 1.33

2012-13 227.25 148.35 -78.90 -34.72

2013-14 149.15 154.40 5.26 3.52

2014-15 154.80 131.95 -22.85 -14.76

2015-16 132.20 272.00 139.80 105.75

Total Returns 61.12

(Source: Investment Reports from Unicon investment Solutions)

Average Return = 61.12/5 = 12.22

 ACC CEMENT LIMITED.

Table: 4.3

Opening Share Closing

Year Price (PO) Share Price (P1-P0) (P1-P0)/P0*100

2011-12 128.65 169.00 40.35 31.36

2012-13 180.80 223.15 42.35 23.42

2013-14 223.65 604.35 380.70 170.22

2014-15 637.05 766.40 129.35 20.30

2015-16 801.65 2241.95 1440.30 179.67

Total Returns 424.98

(Source: Investment Reports from Unicon investment Solutions)

Average Return = 424.98/5 = 84.992

 HERO CORPORATIONS

Table: 4.4

Opening Share Closing

Year Price (PO) Share Price (P1-P0) (P1-P0)/P0*100

2011-12 249.80 462.80 213.00 85.27

2012-13 467.65 480.00 12.35 2.64

2013-14 480.20 910.85 430.35 89.68

2014-15 914.20 1082.10 167.90 18.37

2015-16 1089.35 2746.25 1656.90 152.10

Total Returns 348.06

(Source: Investment Reports from Unicon investment Solutions)

Average Return = 348.06/5 = 69.60

PORTFOLIO CONSTRUCTION, ANALYSIS AND INTERPRETATION

 Portfolio analysis believes in the maximization of return through a combination of securities.

 The modern portfolio theory discusses the relationship between different securities and then
draws inter-relationship or risks between them.
 It is not necessary to achieve success only by trying to get all securities of minimum risk.
 The theory states that by combining a security of low risk with another security of high risk,
success can be achieved by an investor in making a choice of investment outlets.

1 AVERAGE RETURN OF THE COMPANIES:

Table: 4.5

S.NO NAME OF THE COMPANY AVERAGE RETURN

1 ADITHYA BIRLA GROUPS 10.174

2 BAJAJ ALLIANCES LTD. 12.22

3 ACC CEMENT LTD. 84.992

4 HERO CORPORATIONS 69.6

Formula: _
AVERAGE RETURN (R) = Σ(R)/N

Where Σ(R) = Total Return

N = No. of years

INTERPRETATION

 Average return of ACC CEMENT LTD. is high with 84.992 ,

 ADITHYA BIRLA GROUPS is low at 10.174 and BAJAJ ALLIANCES LTD. is also
have least performance as 12.22 average return,
 HERO CORPORATIONS have very less as 69.6.
 CALCULATION OF STANDARD DEVIATION;

Standard Deviation = Variance

Variance = 1/n-1 (R-R)2

ADITHYA BIRLA

Table: 4.6

Year Returns Avg.__Return( R) (R-R) (R-R)2

2011-12 -5.85 10.174 -16.02 256.77

2012-13 -16.40 10.174 -26.57 706.18

2013-14 6.49 10.174 -3.68 13.57

2014-15 -24.55 10.174 -34.72 1205.76

2015-16 91.18 10.174 81.01 6561.97

Total Returns 8744.25

(Source: Investment Reports from Unicon investment Solutions)

Variance =1/n-1 (R_R)2 =1/5-1(8744.25) = 2186.06

Standard Deviation = Variance = 2186.06 = 46.75

BAJAJ ALLIANCES:

Table: 4.7

Year Returns Avg. Return( R) (R-R) (R-R)2

2011-12 1.33 12.2200 -10.89 118.59

2012-13 -34.72 12.2200 -46.94 2203.36

2013-14 3.52 12.2200 -8.70 75.69

2014-15 -14.76 12.2200 -26.98 727.92

2015-16 105.75 12.2200 93.53 8747.86

Total Returns 11873.46

(Source: Investment Reports from Unicon investment Solutions)

Variance =1/n-1 (R_R)2 =1/5-1(11873.43) = 2968.35

Standard Deviation = Variance = 2968.35 = 54.48

ACC CEMENT LTD:

Variance =1/n-1 (R_R)2 = 1/5-1(27080.29) = 6770.07

Table: 4.8

Avg.
Returns Return( R) (R-R) (R-R)2
Year
2011-12 31.36 84.99 -53.63 2876.39

2012-13 23.42 84.99 -61.57 3791.11

2013-14 170.22 84.99 85.23 7263.81

2014-15 20.30 84.99 -64.69 4185.05

2015-16 179.67 84.99 94.68 8963.92

Total Returns 27080.28

(Source: Investment Reports from Unicon investment Solutions)

Standard Deviation = Variance = 6770.07 = 82.28

HERO CORPORATIONS

Table: 4.9

Year Returns Avg. Return( R) (R-R) (R-R)2

2011-12 85.27 69.60 15.67 245.55

2012-13 2.64 69.60 -66.96 4483.64

2013-14 89.68 69.60 20.08 403.21

2014-15 18.37 69.60 -51.23 2624.51

2015-16 152.10 69.60 82.50 6806.25

Total Returns 14563.16

(Source: Investment Reports from Unicon investment Solutions)

Variance =1/n-1 (R_R)2 =1/5-1(14563.16) = 3640.79

Standard Deviation = Variance = 3640.79 = 60.33

STANDARD DEVIATION OF COMPANIES:
Formula:

Standard deviation = Variance

Variance = 1/n-1 (R-R)2

Table: 4.10

S.NO NAME OF THE COMPANY AVERAGE RETURN

1 Adithya Birla Groups 46.75

2 Bajaj Alliances Ltd. 54.48

3 ACC Cement ltd. 82.28

4 Hero Corporations 60.33

Graph: 4.1

AVERAGE RETURN
100
80
60
40
20
0
Adithya Birla GROUPS BAJAJ ALLIANCES LTD. ACC CEMENT LTD. HERO CORPORATIONS

INTERPRETATIONS
Based on the above calculations Standard Deviation of ACC CEMENT LTD is high as
82.28, ADITHYA BIRLA GROUPS is a low with 46.75& other company having medium
standard deviations i.e. BAJAJ ALLIANCES LTD. 54.48 AND HERO CORPORATIONS AS
60.33
Standard deviation is the indication at risk associated with a security. it shows
uncertainty of return from a security from above analysis ACC CEMENT LTD have high
Standard deviation as82.28 and it has practical to get good return ADITHYA BIRLA GROUPS
has 46.75 is low risky.
CALCULATION OF CORRELATION:

Covariance (COV ab) = 1/n-1 (RA-RA) (RB-RB)

Correlation Coefficient = COV ab/σa*σb

1. ADITHYA BIRLA GROUPS & OTHER COMPANIES:

I. ADITHYA BIRLA (RA) BAJAJ ALLIANCES

Table: 4.11

Year (RA-RA) (RB-RB) (RA-RA)(RB-RB)

2011-12
-16.02 -10.89 174.50
2012-13
-26.57 -46.94 1247.38
2013-14
-3.68 -8.70 32.05
2014-15
-34.72 -26.98 936.85
2015-16
81.01 93.53 7576.49

Total Returns 9967.27

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(9967.28) = 2491.82

Correlation Coefficient = COV ab/σa*σb

σa = 46.75; σb = 54.48

= 2491.82/ (46.75) (54.48) = 0.978

 II. ADITHYA BIRLA (RA) & ACC CEMENT LTD. (RB):
Table: 4.12

Year (RA-RA) (RB-RB) (RA-RA)(RB-RB)

2010-2011 -16.02 -53.632 859.40

2011-2012 -26.57 -61.572 1636.21

2012-2013 -3.68 85.228 -313.98

2013-2014 -34.72 -64.692 2246.37

2014-2015 81.01 94.678 7669.49

Total Returns 12097.49

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(12097.48) = 3024.37

Correlation Coefficient = COV ab/σa*σb

σa = 46.75; σb = 82.28

= 3024.37/ (46.75) (82.28) = 0.786

III. ADITHYA BIRLA (RA) & HERO CORPORATIONS (RB):

Table: 4.13

Year (RA-RA) (RB-RB) (RA-RA)(RB-RB)

2011-12 -16.02 15.670 -251.10

2012-13 -26.57 -66.960 1779.40

2013-14 -3.68 20.080 -73.97

2014-15 -34.72 -51.230 1778.91

2015-16 81.01 82.500 6683.00

Total Returns 9916.24

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(9916.23) = 2479.05

Correlation Coefficient = COV ab/σa*σb

σa = 46.75; σb = 60.33

= 2479.05/ (46.75) (60.33) = .878

 2 BAJAJ ALLIANCES & OTHER COMPANIES:

i.BAJAJ ALLIANCES (RA) & ACC CEMENT LTD (RB):

Table: 4.14

(RA-RA) (RB-RB) (RA-RA)(RB-RB)

Year
2011-12 -10.89 -53.632 584.05

2012-13 -46.94 -61.572 2890.19

2013-14 -8.70 85.228 -741.48

2014-15 -26.98 -64.692 1745.39

2015-16 93.53 94.678 8855.23

Total Returns 13333.38

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(13333.38) = 3333.345

Correlation Coefficient = COV ab/σa*σb

σa = 54.48; σb = 82.28

= 3333.345/ (54.48) (82.28) = 0.743

ii.BAJAJ ALLIANCES (RA) & HERO CORPORATIONS (RB):
Table: 4.15

(RA-RA) (RB-RB) (RA-RA)(RB-RB)

Year
2011-12 -10.89 15.670 -170.65

2012-13 -46.94 -66.960 3143.10

2013-14 -8.70 20.080 -174.70

2014-15 -26.98 -51.230 1382.19

2015-16 93.53 82.500 7716.23

Total Returns 11896.17

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(11896.17) = 2974.04

Correlation Coefficient = COV ab/σa*σb

σa = 54.48; σb = 60.33

= 2974.04/ (54.48) (60.33) = 0.90

3. CORRELATION BETWEEN ACC CEMENT (RA) & HERO (RB)

Table: 4.16

Year (RA-RA) (RB-RB) (RA-RA)(RB-RB)

2011-12 -53.632 15.670 -840.41

2012-13 -61.572 -66.960 4122.86

2013-14 85.228 20.080 1711.38

2014-15 -64.692 -51.230 3314.17

2015-16 94.678 82.500 7810.94

Total Returns 16118.94

(Source: Investment Reports from Unicon investment Solutions)

Covariance (COV ab) =1-5-1(16118.93) = 4029.73

Correlation Coefficient = COV ab/σa*σb

σa = 82.28; σb = 60.33

= 4029.73/ (82.28) (60.33) = 0.811

CALCULATION OF PORTFOLIO WEIGHTS:

Formula:

Wa = σb [σb - (nab*σa)]

σa2 + σb2 – 2nab*σa*σb

Wb = 1 – Wa

I. ADITHYA BIRLA & OTHER COMPANIES:

a) ADITHYA BIRLA (a) & BAJAJ ALLIANCES (b);

σa = 46.75,

σb = 54.48 ,

nab = 0.978

Wa = 54.48 [54.48-(0.978*46.75)]

(46.75)2 + (54.48)2 – 2(0.978)*(46.75)*(54.48)

Wa = 476.70

171.82

Wa = 2.77

Wb = 1-Wa

Wb = 1-2.77 = -1.7
b) ADITHYA BIRLA (a) & ACC CEMENT (b):

σa = 46.75,

σb = 82.28 ,

nab = 0.786

Wa = 82.28 [82.28 – (0.786*46.75)]

(46.75)2 + (82.28) 2 – 2(0.786)*(46.75)*(82.28)

Wa = 3746.20
2908.72
Wa = 1.28
Wb = 1-WA
Wb = 1-1.28 = -0.28

C) ADITHYA BIRLA (a) & HERO CORP. (b):

σa = 46.75,
σb = 60.33 ,
nab = 0.878
Wa = 60.33 [60.33 – (0.878*46.75)]
(46.75)2 + (60.33) 2 – 2(0.878)*(46.75)*(60.33)

Wa = 1163.16
872.59

Wa = 1.33
Wb = 1-WA
Wb = 1-1.33 = -0.3
II. BAJAJ & OTHER COMPANIES:
a) BAJAJ (a) & ACC CEMENT (b):

σa = 54.48,

σb = 82.28 ,

nab = 0.743

Wa = 82.28 [82.28 – (0.743*54.48)]

(54.48)2 + (82.28) 2 – 2(0.743)*(54.48)*(82.28)

Wa = 3439.30
3276.90
Wa = 1.04

Wb = 1-WA

Wb = 1-1.04 = -0.04

b) BAJAJ (a) & HERO CO.(b):

σa = 54.48,
σb = 60.33 ,
nab = 0.90
Wa = 60.33 [60.33 – (0.90*54.48)]
(54.48)2 + (60.33) 2 – 2(0.90)*(54.48)*(60.33)

Wa = 681.60
691.57

Wa = 0.98

Wb = 1-WA

Wb = 1-0.98 = 0.02
III. CALCULATION OF WEIGHTS OF ACC CEMENT (a) & HERO CO.(b):

σa = 82.28,
σb = 60.33 ,
nab = 0.811
Wa = 60.33 [60.33 – (0.811*82.28)]
(82.28)2 + (60.33) 2 – 2(0.811)*(82.28)*(60.33)

Wa = -385.50
2358.16

Wa = -0.16
Wb = 1-WA
Wb = 1-(-1.16) = 1.16
3 CORRELATION COEFFICIENT BETWEEN THE SECURITIES

Formula:

Covariance (COV ab) =1/n-1 (RA-RA) (RB-RB)

Correlation Coefficient = COV ab/σa*σb

Where

R = Return
_
R = Average Return
Table: 4.17
SECURITY ADITHYA BIRLA BAJAJ ACC HERO
ADITHYA BIRLA 1 0.978 0.786 0.879
BAJAJ 1 0.743 0.9
ACC 1 0.811
HERO CO. 1
PORTFOLIO WEIGHTS:

Formula:

Wa = σb [σb - (nab*σa)]

σa2 + σb2 – 2nab*σa*σb

Wb = 1 – Wa

Table: 4.18

CORRELATIO WEIGHT OF WEIGHT OF

S.No. PORTFOLIO (A&B) N A B
1 ADITHYA & BAJAJ 0.978 2.77 -1.77

2 ADITHYA & ACC 0.786 1.28 -0.28

3 ADITHYA HERO CO. 0.878 1.33 -0.33

4 BAJAJ & ACC 0.743 0.104 -0.04

5 BAJAJ & HERO CO. 0.90 0.98 0.02

6 ACC& HERO CO. 0.811 -0.16 1.16

INTERPRETATIONS

 Correlation of coefficient is the indication of divertible risk

 If correlation coefficient is positively high or positive value
 it is indication that we cannot reduce the risk by portfolio diversification if correlation
coefficient is negative or negatively correlated securities in the portfolio we can reduce or
eliminate the risk by diversification
 Portfolio BAJAJ and HERO CO. and portfolio ACC and HERO CO. are positive correlated
securities so it is negative advised to set this to portfolio.
4 CALCULATION OF PORTFOLIO RISK

Rp = σa2* Wa2 + σb2* Wb2 + 2nab*σa*σb*Wa*Wb

I. ADITHYA BIRLA & OTHER COMPANIES:

i. ADITHYA BIRLA (a) & BAJAJ(b);

σa = 82.28,

σb = 60.33 ,

Wa = 2.77

Wb = -1.77

nab = 0.978

Rp = (46.75)2 + (2.77)2 + (54.48)2 (-1.77)2 2(0.978)*(46.75)*(54.48)*(2.77)*(-1.77)

= 1627.96 = 40.34
ii. ADITHYA BIRLA (a) ACC CEMENT (b);

σa = 46.75,

σb = 82.28 ,

WA = 1.28

Wb = -0.28

Nab = 0.786

Rp = (46.75)2 + (1.28)2 + (82.28)2 (-0.28)2 2(0.786)*(46.75)*(82.28)*(1.28)*(-0.28)

= 1923.33 = 43.85

iii. ADITHYA BIRLA (a) & HERO CO. (b);

σa = 46.75,

σb = 60.33,

Wa = 1.33

Wb = -0.33

nab = 0.878

Rp = (46.75)2 + (1.33)2 + (60.33)2 (-0.33)2 2(0.878)*(46.75)*(60.33)*(1.33)*(-0.33)

= 2036.83 = 45.13
II. BAJAJ & OTHER COMPANIES:

i. BAJAJ (a) & ACC (b);

σa = 54.48,
σb = 82.28,
Wa = 1.04
Wb = -0.04
nab = 0.743

Rp = (54.48)2 + (1.04)2 + (82.28)2 (-0.04)2 2(0.743)*(54.48)*(82.28)*(1.04)*(-0.04)

= 2939.24 = 54.21

ii. BAJAJ (a) & HERO CO. (b):

σa = 54.48,

σb = 60.33,

Wa = 0.98

Wb = -0.02

nab = 0.90

Rp = (54.48)2 + (0.98)2 + (60.33)2 (0.02)2 2(0.90)*(54.48)*(60.33)*(0.98)*(0.02)

= 2966.74 = 54.46
III. ACC CEMENT (a) & HERO CO. (b):

σa = 82.28,

σb = 60.33,

Wa = -0.16

Wb = 1.16

nab = 0.811

Rp = (82.28)2 + (-0.16)2 + (60.33)2 (1.16)2 2(0.811)*(82.28)*(60.33)*(-0.16)*(1.16)

= 3552.07 = 59.59
5. PORTFOLIO RISK:

Table: 4.19

S.No. COMBINATION PROTFOLIO RISK

1 ADITHYA & BAJAJ 40.34

2 ADITHYA & ACC 43.85

3 ADITHYA & HERO CO, 45.13

4 BAJAJ & ACC 54.21

5 BAJAJ & HERO CO. 54.46

6 ACC & HERO CO. 59.59

Rp = σa2* Wa2 + σb2* Wb2 + 2nab*σa*σb*Wa*Wb

Where,

σa = Standard Deviation of Security a

σb = Standard Deviation of Security b

Wa = Weight of Security a

Wb = Weight of Security b

nab = Correlation Coefficient between Security a & b

Graph: 4.2

PORTFOLIO RISK
70
59.59
60 54.21 54.46
50 43.85 45.13
40.34
40

30

20

10

0
ADITHYA & ADITHYA & ADITHYA & BAJAJ & ACC BAJAJ & ACC & HERO
BAJAJ ACC HERO CO HERO CO. CO

INTERPRETATIONS:

 It is proved fact that portfolio is lower than individual risks at assets of portfolio we
absurd from the calculations in that risk of portfolio.

NAME PORTFILIORETURN
ADITHYA & ACC 43.85
ADITHYA & BAJAJ 40.43
ADITHYA & HERO CO. 45.13
BAJAJ & ACC 54.21
BAJAJ & HERO CO. 54.46
ACC & HERO CO. 59.59
 So it is advised to go for portfolio investment return their individual security investment.
6 CALCULATION OF PORTFOLIO RETURNS:

PR = (Ra*Wa) + (Rb*Wb)

Where,

Ra = Average Return of Security a

Rb = Average Return of Security b

Wa = weight of Security a

Wb = weight of Security b

PR = Portfolio Return

Table: 4.20

COMBINAITONS Ra Wa Rb Wb (Ra*Wa) + (Rb*Wb)

ADITHYA & BAJAJ 10.174 2.77 12.22 -1.77 6.55

ADITHYA & ACC 10.174 1.28 84.992 -0.28 -10.78

ADITHYA & HERO CO. 10.174 1.33 69.6 -0.33 -9.44

BAJAJ& ACC 12.22 1.04 84.992 -0.04 9.31

BAJAJ & HERO CO. 12.22 0.98 69.6 0.02 13.37

ACC & HERO CO. 84.992 -0.16 69.6 1.16 67.14

7 PORTFOLIO RETURN:

PR = (Ra*Wa) + (Rb*Wb)

Where,

Ra = Average Return of Security a

Rb = Average Return of Security b

Wa = weight of Security a

Wb = weight of Security b

PR = Portfolio Return

Table: 4.21

S.No. COMBINATION (Ra*Wa) + (Rb*Wb)

1 ADITHYA & BAJAJ 6.55

2 ADITHYA & ACC -10.78

3 ADITHYA & HERO CO. -9.44

4 BAJAJ & ACC 9.31

5 BAJAJ & HERO CO 13.37

6 ACC & HERO CO 67.14

Graph: 4.3

PORTFOLIO RETURN

80
60
40
20
0
-20 1 2 3 4 5 6

Portfolio Return

INTERPRETATIONS

 It is proved fact that portfolio is lower than individual risks at assets of portfolio we
absurd from the calculations in that risk of portfolio.

NAME PORTFILIORETURN
ADITHYA &ACC -10.78
ADITHYA & BAJAJ 6. 55
ADITHYA & HERO CO. -9.44
BAJAJ &ACC 9.31
BAJAJ& HERO CO. 13.37
ACC & HERO CO. 67.14

 So it is advised it go for portfolio investment return their individual security investment.

8 PORTFOLIO RISK & RETURN:

Table: 4.22

S.No. COMBINATION PORTFOLIO RISK PORTFOLIO RETURN

1 ADITHYA & BAJAJ 40.34 6.55
2 ADITHYA & ACC 43.85 -10.78
3 ADITHYA & HERO CO. 45.13 -9.44
4 BAJAJ & ACC 54.21 9.31
5 BAJAJ & HERO CO 54.46 13.37
6 ACC& HERO CO 59.59 67.14

Graph: 4.4

PORTFOLIO RISK-RETURN

80

60

40

20

0
1 2 3 4 5 6
-20

RISK RETURN

INTERPRETATIONS

 As we absorbed portfolio 6 ACC CEMENT & HERO CO. has the risk level of 59.59 .
 Return from that security is 67.14. So by analysis correlation between the assets we
should put our money into securities.
 FINDINGS & CONCLUSIONS

 As far as the average returns of the selected companies are concerned, ACC CEMENT
LTD. is performing well in isolation where as ADITHYA BIRLA GROUPS is
performing very poor.
 As far as the standard Deviation of the selected companies are concerned, ACC
CEMENT LTD. is very high, where as ADITHYA BIRLA GROUPS is giving less risk
than other companies. This means that the higher the risk the higher the return.
 As far as the correlation co-efficient is concerned the study selects only negatively
correlated scripts as suggested by Markowitz. The combination of securities with ITC is
negatively correlated.
 As far as Portfolio Risk & Return are concerned the combination of securities of ACC
CEMENT & HERO CORPORATIONS is giving more return and meanwhile the risk
involved in that security is also more.

Before investing in shares you should look at the type of shares you want to buy and the way in
which you want to deal on the stock market. The main routes for investing in shares are;

 Investing the capital in a number of different companies( a portfolio of shares)

 Investing indirectly and spreading the risk through collective investments
 SUGGESTIONS

 I suggest to investors to go for portfolio investment. Instead at having single asset

investment.
 Among the analyses combinations at portfolio ACC CEMENT & HERO
CORPORATIONS is suitable for investment
 Choose negatively correlated assets to reduce the risk by diversification complete and
diversity investment by different sector.
 Choose portfolio by having concern about your investment objectives and risk tolerance.
 BIBLIOGRAPHY

REFERENCES

1. V.K. Bhalla : Security Analysis& Portfolio Management

2. NCFM : Derivatives dealers’ module work book

3. V. Avadhani : Investment Management

4. S. Kevin : Portfolio Management

5. Prasanna Chandra : Investment Analysis& Portfolio Management

MAGAZINES

 BUSINESS TODAY
 BUSINESS WORLD
 BUSINESS INDIA

ARTICLES:

UNICON FINANCIAL POLICIES

WEBSITES:

1. www.nseindia.com

2. www.bseindia.com

3. www.google.com

4. www.wikipedia.com

5. www.investropedia.com

All the above sites were referred in the month of January and February 2015