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    Finance and Risk Analytics Capstone Project

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    Garvit Suneja

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    © All Rights Reserved
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    Finance and Risk Analytics Capstone Project

    Uploaded by

    Garvit Suneja
    18 views20 pages

    Copyright

    © © All Rights Reserved

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    PPTX, PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    18 views20 pages

    Finance and Risk Analytics Capstone Project

    Uploaded by

    Garvit Suneja

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    Strategic Portfolio Analysis

    and Investment Consultation


    for Clients
    BY
    ANUSHA VL
    ABHIJEET PRADHAN
    AGENDA

     Objective
     Key findings
     Portfolio Analysis
     Methodology
    OBJECTIVE
    • Evaluate a collection of stocks within a portfolio to offer guidance on investment
    management aligned with the specific needs and preferences of the client.Our
    task is to provide consultation to two different investors, Mr Patrick Jyenger and Mr
    Peter Jyenger based on their requirements and financial objectives.

    • Mr. Patrick Jyenger is looking to allocate $500,000 to equities. Known for his
    conservative investment approach throughout his life, he aims to double his capital
    within a 5-year period while minimizing risk.

    • Mr. Peter Jyenger is interested in investing $1 million in equities. Having maintained


    a high-risk investment strategy throughout his life, he leans towards opportunities
    with high returns. His objective is to double his capital within a 5-year timeframe,
    embracing a higher level of risk in the process.
    KEY FINDINGS
    STOCK DATA

    • There are 24 stocks available from four


    sectors containing 6 stocks from each
    sector.

    • There is an index available to compare


    the stocks outcome with. S&P500 is a
    combinations of top 500 stocks in US
    stock market.

    • This is the list of stocks with their


    abbreviation and Industry and company
    name.
    VISUALIZATION OF ACTUAL STOCK VISUALIZATION OF NORMALIZED STOCK
    VALUES VALUES

    The depicted graph illustrates the performance of The presented graph demonstrates the performance of
    various stocks over the past five years. It is evident all stocks relative to the S&P500 index. It is notable that
    from the graph that Amazon and Google have eight stocks have exhibited returns exceeding 80% by
    outperformed other stocks during this period. the conclusion of the 5-year period
    SECTOR WISE ANALYSIS-
    AVIATION
    • Market took a massive hit in 2020 due to
    corona pandemic which resulted in a bear
    market.
    • Eventhough the market recovered but the
    Aviation Sector underperformed the market
    • Despite the overall market recovery, the aviation
    sector struggled to regain its pre-pandemic
    strength. Factors such as travel restrictions,
    reduced passenger demand, and ongoing
    uncertainties in the industry may contributed to
    the underperformance of aviation industry
    contributed to the underperformance of
    aviation-related stocks
    FINANCE SECTOR

    • Despite the significant downturn in


    the market in 2020 caused by the
    COVID-19 pandemic Morgan Stanley
    and Goldman Sachs not only
    recovered but also outperformed the
    sector.
    • While these two financial institutions
    managed to bounce back strongly,
    the majority of stocks experienced
    negative impacts from the pandemic-
    induced market challenges.
    PHARMA & HEALTHCARE

    • Health and pharma sector showed


    rapid growth after the market crash due
    to covid pandemic in comparison to
    other industries.
    • United Health, Johnson & Johsnson
    have performed well when compared
    to S&P Index
    • Bausch Health is consistently
    performed very badly over the years
    when compared to other stocks in the
    same sector
    TECHNOLOGY
    • Microsoft, Amazon, Apple, Facebook &
    Google have performed well along with
    Market index.
    • The stock performed very badly over the
    years when compared to other stocks in the
    same sector is IBM
    • When compared to other sectors during the
    pandemic Tech sector was one of few
    sectors to bounce back sharply
    CORRELATION AMONG STOCKS
    • Microsoft & Google stocks are highly
    correlated in the Technology sector Stocks.
    • Goldman Sachs,MorganStanley & Wells
    Fargo are correlated in the Finance sector
    Stocks.
    • American Airlines & Delta Airlines are more
    correlated than Alaska Air Group in the
    Aviation sector stocks.
    • Pharma sector stocks are less correlated to
    each other when compared to other sector
    stocks
    KEY METRICS
    At the end of 5 years we can see that top 7 stocks having returns greater
    than S&P500
    •AMZN gives 40.59% annual returns
    •MSFT gives 34.95% annual returns
    •AAPL gives 33.32% annual returns
    •FB gives 26.45% annual returns
    •UNH gives 23.72% annual returns
    •GOOG gives 21.02% annual returns
    •MS gives 14.55% annual returns
    •S&P500 gives 13.04% annual returns

    • Stocks like Amazon (AMZN), Microsoft (MSFT), and Apple (AAPL) have relatively high

    annualized returns, low volatility, and positive Sharpe Ratios, indicating strong risk-

    adjusted performance.
    • Stocks like Wells Fargo (WFC), Credit Suisse (CS), and Deutsche Bank (DB) have negative

    cumulative returns, indicating a loss over the specified period. These stocks also have

    negative Sharpe Ratios, suggesting poor risk-adjusted performance.


    • Bausch Health companies INC(BHC) and American Airlines (AAL) have the most

    substantial negative cumulative returns, indicating significant losses


    ANNUALIZED RETURN & ANNUALIZED
    RISK
     AMZN, MSFT, AAPL, FB, and UNH exhibit
    robust annualized returns, all surpassing
    the 20% mark.
     These top five stocks are associated with a
    moderate level of risk when compared to
    their counterparts in the market
     Stocks with lower annualized returns,
    such as BHC, BCS, DB, CS, and WFC, pose a
    higher risk as they fail to generate returns
    on the initial investment
     Conversely, JNJ, MRK are identified as
    stocks offering comparatively lower risk
    while still providing stable returns.
    SHARPE RATIO
     A higher Sharpe ratio indicates a better risk-
    adjusted performance while negative Sharpe ratios
    suggest that the returns may not be justifying the
    level of risk associated with those investments
     AMZN (1.32), MSFT (1.23), AAPL (1.10), FB (0.80),
    and UNH (0.81) have positive Sharpe ratios,
    indicating that these stocks have provided returns
    that exceed the risk-free rate per unit of risk
     S&P500 (0.64) is used as a benchmark. Stocks with
    Sharpe ratios close to the S&P500 may be
    considered to have a risk-adjusted performance in
    line with the broader market
     IBM,ALGT,ALK,AAL,WFC,CS,DB,CS and BHC have
    negative Sharpe ratios, indicating that the returns
    are not compensating enough for the associated
    risks
    PORTFOLIO ANALYSIS
    PATRICK JYENGER PORTFOLIO
     Mr. Patrick Jyengar wants to double his investment
    in the span on 5 years. He wants to invest in low-
    risk stocks which would fetch him decent returns.
     As per his profile Low risk stocks like JNJ,RHHBY and
    MRK is suitable to invest on. But overall returns
    with these three stocks wouldn't reach the target
    what Mr. Patrick is investing for. A portion of his
    wealth can be invested on MSFT to gain the desired
    returns.
     Keeping all the weightage of stocks equal that is
    0.25 across all stocks.
     As Mr. Patrick Jyengar invests 500 Thousand Dollar
    in equities i.e., the above Portfolio. Returns that he
    would fetch after 5 years is 1.05 Million Dollar with
    558.23 Thousand dollar of gain on investment.
    PETER JYENGER PORTFOLIO
     Mr. Peter Jyengar on the other hand Consistent
    with his attitude towards risk, he prefers high-
    return investments. Believes that he can still
    bounce back in case of any occasional losses.
     He Wants to invest $1 million from company's
    cash and cash equivalents in the most high-
    margin stacks Expects high returns within 5 years
    for inorganic expansion of his company.
     As per his profile stocks like AMZN, MSFT and
    AAPL is suitable to invest on
     Overall returns with this stock would fetch him
    Maximum returns and cater the Risk.
     As Mr. Peter Jyengar invests 1 Million Dollars in
    equities. The returns that he would get after 5
    years of time period is more than 5 Million Dollars
    with more than 4 Million Dollars of gain
    METHODOLOGY
    EXPLORATORY DATA ANALYSIS:
    • Examined the dataset for null values and confirmed that no columns contained missing data.
    • Conducted an outlier analysis on the dataset to identify and evaluate any data points significantly deviating from the overall pattern.
    • Imputed missing values with "0" for Facebook (FB) data, taking into account its listing on the NYSE on May 18, 2012

    DATA ANALYSIS:
    • Applied diverse calculations, including daily and cumulative returns, Sharpe ratios, portfolio risk, and ROI, for in-depth stock data
    analysis
    • Identified top-performing stocks for various portfolios based on rigorous performance metrics.
    • Used Tableau for better visualizations.
    • Performed sector wise analysis to get a better view of each sector.
    • Extracted valuable insights to support informed decision-making in stock selection and portfolio management

    INFERENCES AFTER ANALYSING THE DATA:


    • As we found out that there are 7 stocks which gives more than 80% in last five years of stock market.
    • The stocks that gives best return among all stocks are AMZN, MSFT, AAPL, FB, UNH, GOOG and MS.
    • Conducted a detailed analysis of each stock, considering factors such as Annualized risk, Sharpe ratio, and cumulative returns
    • We found out that AMZN gives highest return among all stock
    • We also found that stocks like JNJ, RHHBY, MRK and MSFT have good returns with less risk.
    • By observing the sectors we understand that the best performing sector is Technology followed by Health and Pharma and the
    worst is Aviation
    • So after doing all the analysis we have finalized the portfolio for both of our customers.
    THANK YOU

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