Question
Consider the following information; Attock Petroleum ER=18% Std.Dev=11% Weight=40% Pakistan Petroleum ER=20% Std.Dev=25% Weight=60% Suppose the correlation between both stocks was r1,2 = -0.10 in
Consider the following information;
| Attock Petroleum | ER=18% | Std.Dev=11% | Weight=40% |
| Pakistan Petroleum | ER=20% | Std.Dev=25% | Weight=60% |
Suppose the correlation between both stocks was r1,2 = -0.10 in 2018, and became r1,2 = 0.40 in 2019.
a) Calculate the expected returns and standard deviation of both portfolios. b) What could be the possible reason of increase in correlation became positive of both companies from same sector. c) What do you think that allocated weights are optimal? Why or why not?
Answer According to Portfolio Management
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Retail Industry IRS Audit Technique Guide
Authors: Internal Revenue Service
1st Edition
1304114783, 978-1304114785
