Consider the daily percent change in the stock price of two companies, A and B, in an investment portfolio.

The stock prices for Company A are as listed: $1.31, ($0.26), $0.88, $0.48, ($0.49), $0.37, ($0.22), $1.34, $0.21, $0.92, $0.76, ($0.53), ($0.72), $0.06, $0.20, $0.41, $0.26, $1.46, $0.53, $1.28, $0.12, ($0.52), ($0.73), $1.06, $1.33, ($0.18), $2.04, $1.57, ($0.50), $0.91, ($0.25), $0.62, ($2.04), $0.46, $1.69, $0.11, ($0.55), $1.13, $0.91, ($1.19), ($1.33), $0.89.

The stock prices for Company B are as listed: $0.38, $1.27, $0.56, $0.62, ($0.55), ($1.24), ($1.87), $1.30, ($0.19), $0.42, ($1.06), ($1.07), $0.58, $0.65, $0.76, $0.85, $0.74, $0.83, $0.83, $0.36, $0.18, ($1.08), ($0.91), $1.87, $2.85, ($0.53), $1.79, $2.73, ($0.76), $1.33, ($0.50), $1.93, ($0.10), ($0.95), $0.40, $0.18, ($2.59), $1.18, ($0.73), ($1.71), ($3.11), $0.77.

Using Microsoft Excel or Minitab19 would probably help with the manual computation for the upcoming questions.

Question #1: Draw a scatterplot of company A daily percent changes against company B daily percent changes. Describe the relationship between daily percent changes that you see in this scatterplot.

Question #2: Determine the regression equation to predict the daily percent change in the stock price of company A from the daily percent change in the stock price of company B. Interpret the value of the slope coefficient.

Question #3: Find the correlation between the percent changes. Does the correlation value support your description of the scatterplot in Question #1?

Question #4: Compute the corresponding coefficient of determination and interpret its value. In financial terms, it represents the proportion of non-diversifiable risk in company A.

Question #5: Compute the 95% confidence interval for the slope coefficient.

Question #6: Test at the 5% significance level whether the slope coefficient is significantly different from 1, representing the beta of a highly diversified portfolio. Don't forget to show your computations.