Eileen Wong 17WBR11737

Expected return is used to measure the mean or the expected value of the
investment return that it can provide to investors. Refer to the Task 2, the expected
return of Genting, Gamuda, Sime Darby and KLSE are (5.51%), (7.69%), (5.47%)
and (3.34%) respectively. We found that Gamuda has the highest expected return
which means that Gamuda has performed much better in the past ten years compared
with another two companies. The figure of expected return for those three companies
were positive which means that we can concluded their share price increased after ten
years.
Next, standard deviation is a method that to measure of of risk of that investment
and how much of the return that the investor could get it after a period of time. The
standard deviation of those three companies are 24.28% ,18.67% and 20.75%. Refer
to he Task 2 as well, we found that Gamuda had the lowest standard deviation which
is 18.67% . This result showed that Gamuda’s stock price will be more stable
compared with another two companies. Genting is the most volatile stocks and the
most highest risk among these three stocks.
Besides, a beta is used to measure the volatility of that particular stocks of return
relative to the entire market. We know that the higher the beta, the greater the risk and
also the greater the expected return. The beta of Genting, Gamuda and Sime Darby is
1.8374 , 1.4118 and 1.0222. Beta nearly to 1 means that the stock is volatile as the
market. Refer to the task 2, it shows that the beta of Sime Darby is 1.0222 which very
close to the beta =1. Gamuda and Genting has the beta that larger than 1 which means
that their own price will be more volatile than the market.
In my opinion as a investor, I will choose to invest in Gamuda stock. As you can
see from the findings that Gamuda has the highest expected return (7.69%) and the
lowest standard deviation (18.67%). Although the beta of Gamuda is high but a
company with a higher beta will have a greater expected return in the future.
Based on the Task 3, the portfolio return of Portfolio 1 (Genting and Gamuda) is
(6.60%), the second portfolio is Genting and Sime Darby which represent 5.49% of
the portfolio return and the last portfolio which is Gamuda and Sime Darby that
represent 6.58% of the portfolio return. According to the data, the highest portfolio
return will be portfolio 1 followed by the portfolio 3 and portfolio 2. Portfolio 1 has
the highest portfolio return which means that it also represent the highest portfolio
risk (19.90%), followed by the second highest of the portfolio risk which is (18.54%)
that represent by the portfolio 2 and the lowest is (16.70%) of portfolio 3.
Based on the data above, I will prefer to choose Gamuda and Sime Darby this is
because it has the lowest portfolio risk . In the other hand, I will not consider about
portfolio 3 due to the lowest return among these three portfolio and has the highest
portfolio risk among these three portfolio.
Correlation can be considered as a relationship that between two or more
variables in a portfolio. The correlation of Portfolio 1 is 0.7129 , the portfolio 2 is
0.3526 and the portfolio 3 is 0.4338. When the correlation between two stocks will be
1.0 then it means that the investor will consider Portfolio 3. This is because the
relationship between Gamuda and Sime Darby’s stock price is a bit not so correlated.