Get the monthly adjusted closing prices from 31.03.2016 - 31.03.2023 for AMAZON (AMZN) and Alibaba (BABA) from finance.yahoo.com

1) Return and Risk Measures

Compute the following variables for both stocks:

• monthly stock return
• average monthly stock return
• standard deviation / Excel Function =STDEV

as well as

• covariance / Excel Function =COVAR()
• correlation / Excel Function =CORREL()

between both stocks.

2) Two-Stock Portfolio

Build an equally weighted portfolio of both stocks (50% for AMAZON and 50% for Alibaba) and compute

• the monthly portfolio return
• the average monthly portfolio return
• the portfolio variance and volatility

3) Sharpe ratios

Build six portfolios of both stocks with the following weights:

AMAZON ALIBABA

• 100% 0%
• 80% 20%
• 60% 40%
• 40% 60%
• 20% 80%
• 0% 100%

Compute for the six portfolios:

• the expected portfolio return (use the average monthly stock return calculated in task 1)
• the portfolio variance and volatility
• the sharpe ratio - assume a risk free rat of 0.5%

Mark the portfolio with the highest expected return, the portfolio with the lowest risk and the portfolio you would choose in order to gain the best reward-to-volatility relation.

Please solve this task with formula input and output, as well as step by step explanation for solution, thank you!