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Two stocks from the American Stock Trade (ASX) are joined in a portfolio. From ten years of execution information, still up in the air the
Two stocks from the American Stock Trade (ASX) are joined in a portfolio.
From ten years of execution information, still up in the air the value instability of
each stock to be as per the following:
Stock A
Stock B
Fluctuation 24.35
Fluctuation 7.97
Standard Deviation
4.93
Standard Deviation 2.82
Stock A will be a repeating stock whose instability follows the unpredictability of the TSX. Stock B
then again is a counter repeating stock. Thus, the two stocks are
corresponding and in a portfolio produce a Connection Coefficient of - 0.35. Based
on the data gave, assuming that you will probably limit the instability of the portfolio,
would you anticipate that the portfolio should contain a greater amount of Stock An and less of Stock B or
a greater amount of Stock B and less of Stock A? Clarify the reason for your decision.
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