Stock Portfolio Analysis in Excel: Beta Calculation, Portfolio Weight Optimization, and Valuation Assessment
The assignment submission will consist of an excel file.
- The data and workings in the excel worksheet should be appropriately labelled to make it easy to review and
verify independently. Please do computations for each of the 3 sections below on separate worksheets.
Where possible, use predefined functions in excel. The ability to follow these instructions will be part of the evaluation. - Apart from the data and computations, please add text and explain the steps and rationale. List any assumptions that you have made, and justification for those assumptions. There will be weightage for explaining what you are doing, even if there is an error in the calculations, so please be diligent.
Assignment
1. Assuming that the NSE Total Market Index represents a diversified market, compute ? for the stock for
the period 01/01/2021 to 01/01/2022. (10 marks)
2. Assume that you have a portfolio that only invests in two assets (a) the stock you have selected above
and (b) the NSE Total Market Index.
- What would be the weight of your stock and NSE Total Market Index in your portfolio to
achieve the lowest level of risk from this portfolio? (Remember that the weight of an asset in a
portfolio can also be negative by short selling the asset, and in such case the weight of the other
asset can be greater than 100%) - What is this lowest possible level of risk?
- At that level of risk, what return can you expect from this portfolio?
3. Is your stock overvalued, undervalued or fairly valued? Why?
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