Average Return:

The Expected rate of return is the weighted average of all possible returns multiplied by their
respective probabilities.
Average return = R/N
Variance and Standard deviation:
The most commonly used measure of risk in finance is variance or its square root the
standard deviation. The variance and standard deviation of a historical return series.

Standard Deviation = Variance

Variance = 1/n-1 (d2)
Covariance and Correlation:
Covariance and Correlation are conceptually analogous in the sense that both of them reflect
the degree of co movement between two variables.
Covariance (COVab) = 1/(n-1) (dx.dy)
Correlation of coefficient = COVab/a*b

CALCULATION

OF

AVERAGE

RETURN

&

STANDARD

DEVIATION

OF

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

992.88

695.41

-29.96

0.51

-30.47

928.43

2011

695.41

663.37

-4.61

0.51

-5.12

26.19

2012

663.37

981.38

47.94

0.51

47.43

2249.53

2013

981.38

959.39

-2.24

0.51

-2.75

7.57

2014

959.39

876.85

-8.60

0.51

-9.11

83.06

COMPANIES:
ICICI BANK

2.53

3294.77

Variance = 1/n-1 (d2) = 1/5-1 (3294.77) = 823.69

Standard Deviation =

Variance

= 823.69

= 28.70

INTERPRETATION:
The Standard deviation of ICICI BANK is 28.70, the average returns was very low with 0.51, the
above table clearly states that during the 5 years tenure ICICI BANK has yielded negative
returns in 4 years.

SBI BANK
Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

252.98

245.99

-2.76

16.85

-19.61

384.70

2011

245.99

275.29

11.91

16.85

-4.94

24.39

2012

275.29

411.90

49.62

16.85

32.77

1074.11

2013

411.90

459.02

11.44

16.85

-5.41

29.29

2014

459.02

523.40

14.03

16.85

-2.82

7.97

84.24

1520.46

Variance = 1/n-1 (d2) = 1/5-1 (1520.46) = 380.12

Standard Deviation =

Variance

= 380.12

= 19.50

INTERPRETATION:
The Standard deviation of HDFC BANK is 19.50, the average returns are 16.85, from the above
table it can be understand that HDFC BANK is giving good returns, but in the year 2010 it
yielded negative returns. The above data reflects after adjusting to stock split of 5:1 in july 2013.

INFOSYS
Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

1931.23

1533.03

-20.62

9.22

-29.84

890.36

2011

1533.03

1870.53

22.01

9.22

12.79

163.70

2012

1870.53

2823.06

50.92

9.22

41.70

1739.19

2013

2823.06

2821.04

-0.07

9.22

-9.29

86.33

2014

2821.04

2648.12

-6.13

9.22

-15.35

235.62

46.12

3115.20

Variance = 1/n-1 (d2) = 1/5-1 (3115.20) = 778.80

Standard Deviation =

Variance

= 778.80

= 27.91

INTERPRETATION:
The Standard devaition of INFOSYS is 27.91, the average returns are 9.22 the table signifies that
returns of INFOSYS are fluctuating from year to year.

TCS

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

1144.77

770.78

-32.67

5.94

-38.61

1490.65

2011

770.78

581.76

-24.52

5.94

-30.46

928.04

2012

581.76

869.79

49.51

5.94

43.57

1898.35

2013

869.79

1129.70

29.88

5.94

23.94

573.26

2014

1129.70

1214.61

7.52

5.94

1.58

2.48

29.72

4892.79

Variance = 1/n-1 (d2) = 1/5-1 (4892.79) = 1223.20

Standard Deviation =

Variance

= 1223.20

= 34.97

INTERPRETATION:
The Standard deviation of TCS is 34.97, the average returns are 5.94, the table states that TCS
are giving good returns for the past 3 years but standard deviation is high.

ITC

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

86.80

95.48

9.99

21.87

-11.88

141.10

2011

95.48

107.82

12.93

21.87

-8.94

79.98

2012

107.82

150.91

39.97

21.87

18.10

327.59

2013

150.91

193.54

28.25

21.87

6.38

40.66

2014

193.54

228.78

18.21

21.87

-3.66

13.39

109.35

602.72

Variance = 1/n-1 (d2) = 1/5-1 (602.72) = 150.68

Standard Deviation =

Variance

= 150.68

= 12.28

INTERPRETATION:
The Standard deviation of ITC is 12.28 the average returns are 21.87, from table it can be
understand that ITC is yielding high returns & the standard deviation is also very low. The above
data reflects after adjusting bonus issue of 2:1 in july 2012.

HINDUSTAN UNILEVER LIMITED (HUL)

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

203.69

233.36

14.57

15.40

-0.83

0.69

2011

233.36

261.07

11.87

15.40

-3.53

12.45

2012

261.07

265.83

1.83

15.40

-13.57

184.26

2013

265.83

327.91

23.35

15.40

7.95

63.22

2014

327.91

411.14

25.38

15.40

9.98

99.66

77.00

360.28

Variance = 1/n-1 (d2) = 1/5-1 (360.28) = 90.07

Standard Deviation =

Variance

= 90.07

= 9.49

INTERPRETATION:
The Standard deviation of HUL is 9.49, the average returns are 15.40 the table clearly signifies
that HUL is giving good returns, all the years returns are positive.

SUN PHARMACEUTICAL INDUSTRIES LTD.

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

206.21

257.70

24.97

24.12

0.85

0.73

2011

257.70

248.05

-3.75

24.12

-27.87

776.49

2012

248.05

368.93

48.73

24.12

24.61

605.73

2013

368.93

478.10

29.59

24.12

5.47

29.94

2014

478.10

578.75

21.05

24.12

-3.07

9.42

120.60

1422.31

Variance = 1/n-1 (d2) = 1/5-1 (1422.31) = 355.58

Standard Deviation =

Variance

= 355.58

= 18.86

INTERPRETATION:
The Standard deviation of SUN PHARMACEUTICAL is 18.86, the average returns are 24.12,
with 48.73 returns being highest in the year 2012 & lowest returns being -3.75 in the year 2011.
The above data reflects after adjusting to stock split of 5:1 in November 2012.

CIPLA

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

205.58

208.67

1.50

9.96

-8.46

71.58

2011

208.67

257.52

23.41

9.96

13.45

180.97

2012

257.52

332.20

29.00

9.96

19.04

362.49

2013

332.20

310.91

-6.41

9.96

-16.37

267.95

2014

310.91

318.07

2.30

9.96

-7.66

58.64

49.80

941.63

Variance = 1/n-1 (d2) = 1/5-1 (941.63) = 235.41

Standard Deviation =

Variance

= 235.41

= 15.34

INTERPRETATION:
The Standard deviation of CIPLA is 15.34, the average returns are 9.96, from the above table it
can be understand that CIPLA is yielding good returns with low standard deviation.

RELIANCE INDUSTRIES LTD

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

1980.88

2027.83

2.37

-16.21

18.58

345.22

2011

2027.83

1705.24

-15.91

-16.21

0.30

0.09

2012

1705.24

1026.61

-39.80

-16.21

-23.59

556.33

2013

1026.61

877.52

-14.52

-16.21

1.69

2.85

2014

877.52

761.83

-13.18

-16.21

3.03

9.16

-81.04

913.66

Variance = 1/n-1 (d2) = 1/5-1 (913.66) = 228.41

Standard Deviation =

Variance

= 228.41

= 15.11

INTERPRETATION:
The Standard deviation of RELIANCE INDUSTRIES LTD is 15.11, the average returns are
negative with -16.21, they are yielding negative returns in all the years except in 2010.

OIL AND NATURAL GAS CORPORATION LTD (ONGC)

Year

Opening
Share
Price (P0)

Closing
Share
Price (P1)

R= (P1-P0)
/P0*100

Average
Return (R
= R/5)

d= (R-R)

d2

2010

486.89

449.26

-7.73

-6.80

-0.93

0.86

2011

449.26

511.16

13.78

-6.80

20.58

423.48

2012

511.16

611.91

19.71

-6.80

26.51

702.74

2013

611.91

301.04

-50.80

-6.80

-44.00

1936.32

2014

301.04

274.10

-8.95

-6.80

-2.15

4.61

-33.99

3068.02

Variance = 1/n-1 (d2) = 1/5-1 (3068.02) = 767.01

Standard Deviation =

Variance

= 767.01

= 27.69

INTERPRETATION:
The Standard deviation of ONGC is 27.69, the average returns are negative with -6.80, the
returns of ONGC are fluctuating from year to year & the standard deviation is very high. The
above data reflects after adjusting to stock split of 2:1 in February 2013.

CALCULATION OF CORRELATION BETWEEN TWO COMPANIES

Correlation Between ICICI BANK & SBI BANK:
YEAR

2010
2011
2012
2013
2014

Dev. Of ICICI

Dev. Of HDFC

Product of dev.

BANK (dx)

BANK (dy)

(dx)(dy)

-30.47
-5.12
47.43
-2.75
-9.11
TOTAL

-19.61
-4.94
32.77
-5.41
-2.82

597.63
25.28
1554.42
14.89
25.73
2217.95

COVab =1/(5-1)(2217.95) =544.49

Correlation of coefficient = 544.49/(28.7)(19.5) = 0.99
INTERPRETATION:
The correlation of coefficient between ICICI BANK & HDFC BANK is 0.99 this clearly says
that the both the companies are moving in same way.

Correlation Between INFOSYS & TCS:

YEAR

Dev. Of

Dev. Of TCS (dy)

INFOSYS (dx)
2010
2011
2012
2013
2014

-29.84
12.79
41.70
-9.29
-15.35
TOTAL

Product of dev.
(dx)(dy)

-38.61
-30.46
43.57
23.94
1.58

COVab =1/(5-1)(2332.65) = 583.16

1152.05
-389.77
1817.03
-222.47
-24.19
2332.65

Correlation of coefficient = 583.16/(27.91)(34.97) = 0.60

INTERPRETATION:
The correlation of coefficient between INFOSYS & TCS is 0.60, this table states that INFOSYS
& TCS are yeilding same percentage of returns year by year.

Correlation Between ITC & HUL:

YEAR

Dev. Of ITC (dx)

Dev. Of HUL (dy)

Product of dev.
(dx)(dy)

2010
2011
2012
2013
2014

-11.88
-8.94
18.10
6.38
-3.66
TOTAL

-0.83
-3.53
-13.57
7.95
9.98

9.90
31.55
-245.69
50.70
-36.52
-190.05

COVab =1/(5-1)(-1.90.05) = -47.51

Correlation of coefficient = -47.51/(12.28)(9.94) = -0.41

INTERPRETATION:
The correlation of coefficient between ITC & HUL is -0.41, from the above table it can state that
returns of ITC & HUL are negatively correlated to each other.

Correlation Between SUN PHARMACEUTICAL & CIPLA:

YEAR

Dev. Of SUN

Dev. Of

Product of dev.

PHARMACEUTICAL (dx)
2010
2011
2012
2013
2014

CIPLA (dy)

(dx)(dy)

-8.46
13.45
19.04
-16.37
-7.66

-7.22
-374.86
468.59
-89.57
23.50
20.44

0.85
-27.87
24.61
5.47
-3.07
TOTAL

COVab =1/(5-1)(20.44) = 5.11

Correlation of coefficient = 5.11/(18.86)(15.34) = 0.02
INTERPRETATION:
The correlation of coefficient between SUN PHARMACEUTICAL & CIPLA is 0.02, this
clearly states that SUN PHARMACEUTICAL & CIPLA returns are very less positively
correlated to each other.
Correlation Between RELIANCE INDUSTRIES LTD & OIL AND NATURAL GAS
CORPORATION LTD :
YEAR

Dev. Of

Dev. Of ONGC

Product of dev.

RELIANCE (dx)

(dy)

(dx)(dy)

18.58
0.30
-23.59
1.69
3.03
TOTAL

-0.93
20.58
26.51
-44.00
-2.15

-17.27
6.21
-625.27
-74.26
-6.50
-717.08

2010
2011
2012
2013
2014

COVab =1/(5-1)(-717.08) =-179.27

Correlation of coefficient = -179.27/(15.11)(27.69) = -0.43

INTERPRETATION:

The correlation of coefficient between RELIANCE & ONGC is -0.43, the above table signifies
that RELIANCE & ONGC returns are negatively correlated.

CALCULATION OF PORTFOLIO WEIGHTS:

Deriving the minimum risk portfolio, the following formula is used:

2

Wa =

Where,
Xa is the proportion of security A
Xb is the proportion of security B
a = standard deviation of security A
b = standard deviation of security B
rab = correlation co-efficient between A&B

ICICI BANK & SBI BANK:

(19.5)2- (0.99) (28.7) (19.5)

Xa =
(28.7)2 + (19.5)2-2 (0.99)(28.7) (19.5)
= -1.81
Xb = 1- Xa
= 1- (-1.18)
= 2.18

INFOSYS & TCS:

(34.97)2- (0.60)(27.91) (34.97)
Xa =
(27.91)2 + (34.97)2-2 (0.60)(27.91) (34.97)
= 0.77
Xb = 1- 0.77
= 0.23

ITC & HUL:

(9.49)2- (-0.41)(12.28) (9.49)
Xa =
(12.28)2 + (9.49)2-2 (-0.41)(12.28) (9.49)
= 0.41
Xb = 1- 0.41
= 0.59
SUN PHARMACEUTICAL & CIPLA:
(15.34)2- (0.02)(18.86)(15.34)
Xa =
(18.86)2 + (15.34)2-2 (0.02)(18.86)(15.34)
= 0.40
Xb = 1- 0.40
= 0.60

RELIANCE INDUSTRIES & ONGC:

(27.69)2- (-0.43)(15.11)(27.69)
Xa =
(15.11)2 + (27.69)2-2 (-0.43)(15.11)(27.69)
= 0.70
Xb = 1- 0.70
= 0.30

CALCULATION OF PORTFOLIO RISK:

For two securities:

*(Xa) 2

*(Xb) 2

Where,
P = portfolio risk
Xa = proportion of investment in security A
Xb = proportion of investment in security B
R12 = correlation co-efficient between security 1 & 2
a = standard deviation of security 1
b = standard deviation of security 2

ICICI BANK & SBI BANK:

p = (-1.81)2 *(28.7)2 +(2.18)2 *(19.5)2 +2(0.99)(-1.81)(2.18)(28.7)(19.5)

= 65.04
= 8.06
INFOSYS & TCS:
p = (0.77)2 *(27.91)2 +(0.23)2 *(34.97)2 +2(0.60)(0.77)(0.23)(27.91)(34.97)
= 733.96
= 27.09
ITC & HUL:
p = (0.41)2 *(12.28)2 +(0.59)2 *(9.49)2 +2(-0.41)(0.41)(0.59)(12.28)(9.49)
= 33.58
= 5.80
SUNPHARMACEUTICAL & CIPLA:
p = (0.40)2 *(18.86)2 +(0.60)2 *(15.34)2 +2(0.02)(0.60)(0.40)(18.86)(15.34)
= 144.40
= 12.02
RELIANCE INDUSTRIES & ONGC:
p = (0.70)2 *(15.11)2 +(0.30)2 *(27.69)2 +2(-0.43)(0.70)(0.30)(15.11)(27.69)
= 105.32
= 10.26

CALCULATION OF PORTFOLIO RETURN:

Rp = W1R1 + W2R2 (for two securities)

Rp = W1R1+ W2R2 + W3R3 (for three securities)
Where,
W1, W2, W3 are the weights of the securities
R1, R2, R3 are the Expected returns
ICICI BANK & SBI BANK:
Rp = (-1.81)(0.51) +(2.81)(16.85)
= 46.43
INFOSYS & TCS:
Rp = (0.77)(9.22) +(0.23)(5.94)
= 8.47
ITC & HUL:
Rp = (0.41)(21.87) +(0.59)(15.40)
= 20.38
SUN PHARMACEUTICAL & CIPLA:
Rp = (0.40)(24.12) +(0.60)(9.96)
= 15.62
RELIANCE INDUSTRIES & ONGC:
Rp = (0.70)(-16.21)+(0.30)(-6.8)
= -10.56

CALCULATION OF CORRELATION BETWEEN TWO COMPANIES OF DIFFERENT

INDUSTRIES:
Correlation Between TCS & HUL:
YEAR

Dev. Of TCS (dx)

Dev. Of HUL (dy)

Product of dev.
(dx)(dy)

2010
2011
2012
2013
2014

-38.61
-30.46
43.57
23.94
1.58
TOTAL

-0.83
-3.53
-13.57
7.95
9.98

32.18
107.48
-591.43
190.37
15.73
-245.66

COVab =1/(5-1)(-245.66) =-61.42

Correlation of coefficient = -61.42/(34.97)(9.49) = -0.19

Correlation Between ICICI & ITC:

YEAR

Dev. Of ICICI

Dev. Of ITC (dy)

(dx)
2010
2011
2012
2013
2014

-30.47
-5.12
47.43
-2.75
-9.11
TOTAL

Product of dev.
(dx)(dy)

-11.88
-8.94
18.10
6.38
-3.66

COVab =1/(5-1)(1281.95) =320.49

361.94
45.77
858.44
-17.54
33.34
1281.95

Correlation of coefficient = 320.49/(28.70)(12.28) = 0.91

Correlation Between INFOSYS & RELIANCE INDUSTRIES LIMITED:

YEAR

2010
2011
2012
2013
2014

Dev. Of

Dev. Of

Product of dev.

INFOSYS (dx)

RELIANCE (dy)

(dx)(dy)

-29.84
12.79
41.70
-9.29
-15.35
TOTAL

18.58
0.30
-23.59
1.69
3.03

-554.41
3.86
-983.65
-15.68
-46.46
-1596.34

COVab =1/(5-1)(-1596.34) =-399.08

Correlation of coefficient = -399.08/(27.91)(15.11) = -0.95

CALCULATION OF PORTFOLIO WEIGHTS:

TCS & HUL:

(9.49)2- (-0.19) (34.97) (9.49)

Xa =

(34.97)2 + (9.49)2-2 (-0.19) (34.97) (9.49)

= 0.11
Xb = 1- Xa
= 1- (0.11)
= 0.89

ICICI & ITC:

(12.28)2- (0.91)(28.7) (12.28)
Xa =
(28.7)2 + (12.28)2-2 (0.91)(28.7) (12.28)
= -0.51
Xb = 1- (-0.51)
= 1.51

INFOSYS & RELIANCE:

(15.11)2- (-0.95)(27.91) (15.11)
Xa =
(27.91)2 + (15.11)2-2 (-0.95)(27.91) (15.11)
= 0.35
Xb = 1- 0.35
= 0.65

CALCULATION OF PORTFOLIO RISK OF TWO COMPANIES OF DIFFERENT

INDUSTRIES:
TCS & HUL:

p = (0.11)2 *(34.97)2 +(0.89)2 *(9.49)2 +2(-0.19)(0.11)(0.89)(34.97)(9.49)

= 73.79
= 8.59

ICICI & ITC:

p = (-0.51)2 *(28.7)2 +(1.51)2 *(12.28)2 +2(0.91)(-0.51)(1.51)(28.7)(12.28)
= 64.11
= 8.01
INFOSYS & RELINACE:
p = (0.35)2 *(27.91)2 +(0.65)2 *(15.11)2 +2(-0.95)(0.35)(0.65)(27.91)(15.11)
= 9.60
= 3.10

CALCULATION OF PORTFOLIO RETURN OF TWO COMPANIES OF DIFFERENT

INDUSTRIES:

TCS & HUL:

Rp = (0.11)(34.97) +(0.89)(9.49)
= 12.29
ICICI & ITC:

Rp = (-0.51)(28.7) +(1.51)(12.28)
= 3.91
INFOSYS & RELINACE:
Rp = (0.35)(27.91) +(0.65)(15.11)
= 19.59
CALCULATION OF CORRELATION BETWEEN TWO COMPANIES OF DIFFERENT
INDUSTRIES:
Correlation Between TCS & HUL:
YEAR

Dev. Of TCS (dx)

Dev. Of HUL (dy)

Product of dev.
(dx)(dy)

2010
2011
2012
2013
2014

-38.61
-30.46
43.57
23.94
1.58
TOTAL

-0.83
-3.53
-13.57
7.95
9.98

32.18
107.48
-591.43
190.37
15.73
-245.66

COVab =1/(5-1)(-245.66) =-61.42

Correlation of coefficient = -61.42/(34.97)(9.49) = -0.19
Correlation Between TCS & SBI :
YEAR

2010
2011
2012
2013
2014

Dev. Of TCS (dx)

-38.61
-30.46
43.57
23.94
1.58
TOTAL

Dev. Of HDFC

Product of dev.

(dy)

(dx)(dy)

-19.61
-4.94
32.77
-5.41
-2.82

757.26
150.46
1427.95
-129.58
-4.45
2201.64

COVab =1/(5-1)(2201.64) =550.41

Correlation of coefficient = 550.41/(34.97)(19.5) = 0.81

Correlation Between SBI & HUL:

YEAR

Dev. Of HDFC

Dev. Of HUL (dy)

(dx)
2010
2011
2012
2013
2014

-19.61
-4.94
32.77
-5.41
-2.82
TOTAL

Product of dev.
(dx)(dy)

-0.83
-3.53
-13.57
7.95
9.98

16.35
17.43
-444.87
-43.03
-28.18
-482.32

COVab =1/(5-1)(-482.32) = -120.58

Correlation of coefficient = -120.58/(19.5)(9.49) = -0.65

Correlation Between INFOSYS & RELIANCE INDUSTRIES LIMITED:

YEAR

2010
2011
2012
2013
2014

Dev. Of

Dev. Of

Product of dev.

IBFOSYS (dx)

RELIANCE (dy)

(dx)(dy)

-29.84
12.79
41.70
-9.29
-15.35
TOTAL

18.58
0.30
-23.59
1.69
3.03

-554.41
3.86
-983.65
-15.68
-46.46
-1596.34

COVab =1/(5-1)(-1596.34) = -399.08

Correlation of coefficient = -399.08/(27.9)(15.11) = -0.95

Correlation Between INFOSYS &ITC:

YEAR

Dev. Of

Dev. Of ITC (dy)

INFOSYS (dx)
2010
2011
2012
2013
2014

Product of dev.
(dx)(dy)

-29.84
12.79
41.70
-9.29
-15.35
TOTAL

-11.88
-8.94
18.10
6.38
-3.66

354.44
-114.43
754.81
-59.25
56.16
991.73

COVab =1/(5-1)(991.73) = 247.93

Correlation of coefficient = 247.93/(27.91)(12.28) = 0.72

Correlation Between RELIANCE INDUSTRIES LIMITED & ITC:

YEAR

Dev. Of

Dev. Of ITC (dy)

RELIANCE (dx)
2010
2011
2012
2013
2014

18.58
0.30
-23.59
1.69
3.03
TOTAL

Product of dev.
(dx)(dy)

-11.88
-8.94
18.10
6.38
-3.66

-220.70
-2.70
-426.91
10.76
-11.07
-650.52

COVab =1/(5-1)(-650.52) = -162.66

Correlation of coefficient = -162.66/(15.11)(12.28) = -0.88

CALCULATION OF PORTFOLIO WEIGHTS:

TCS & HUL:

(9.49)2- (-0.19) (34.97) (9.49)
Xa =
(34.97)2 + (9.49)2-2 (-0.19) (34.97) (9.49)
= 0.11
Xb = 1- Xa
= 1- (0.11)
= 0.89
TCS & SBI :
(19.5)2- (0.81)(34.97) (19.5)
Xa =
(34.97)2 + (19.5)2-2 (0.81)(34.97) (19.5)
= -0.35
Xb = 1- (-0.35)
= 1.35

SBI & HUL:

(9.49)2- (-0.65)(19.5) (9.49)

Xa =
(9.49)2 + (19.5)2-2 (-0.65)(19.5) (9.49)
= 0.30
Xb = 1- (0.30)
= 0.70

INFOSYS & RELIANCE INDUSTRIES LIMITED:

(15.11)2- (-0.95)(27.91) (15.11)
Xa =
(27.91)2 + (15.11)2-2 (-0.95)(27.91) (15.11)
= 0.35
Xb = 1- (0.35)
= 0.65

INFOSYS & ITC:

(12.28)2- (0.72)(27.91) (12.28)
Xa =
(27.91)2 + (12.28)2-2 (0.72)(27.91) (12.28)
= -0.22
Xb = 1- (-0.22)
= 1.22

RELIANCE & ITC:

(12.28)2- (-0.88)(15.11) (12.28)

Xa =
(12.28)2 + (15.11)2-2 (-0.88)(15.11) (12.28)
= 0.45
Xb = 1- (0.45)
= 0.55

CALCULATION OF PORTFOLIO RISK OF THREE COMPANIES OF DIFFERENT

INDUSTRIES:
TCS, HUL & SBI :
p = {(0.08)2 *(34.97)2 +(0.64)2 *(9.49)2+(0.28)2 *(19.5)2 +2(-0.19)(0.08)(34.97)(0.64)
(9.49)+2(-0.65)(0.64)(0.28)(9.49)(19.5)+2((0.81)(0.08)(34.97)(0.28)(19.5)}
= (49.10)
= 7.01
INFOSYS, RELIANCE INDUSTRIES LIMITED & ITC:
p = {(0.20)2 *(27.9)2 +(0.36)2 *(15.11)2+(0.44)2 *(12.28)2 +2(-0.95)(0.20)(27.9)(0.36)
(15.11)+2(-0.88)(0.36)(15.11)(0.44)(12.28)+2(0.72)(0.44)(12.28)(0.20)(27.9)
= (23.94)
= 4.89

CALCULATION OF PORTFOLIO RETURN OF THREE COMPANIES OF

DIFFERENT INDUSTRIES:

TCS, HUL & SBI :

Rp = (0.08)(5.94) +(0.64)(15.40)+(0.28)(16.85)
= 15.05
INFOSYS, RELIANCE INDUSTRIES LIMITED & ITC:
Rp = (0.20)(9.22)(0.36)(-16.21)(0.44)(21.87)
= 5.63