Question

Calculate the average weekly returns and the standard deviation of the 2 companies and the index over the last year. Which of the companies has higher risk? Which factors specific to that company might explain the fact that the company has higher risk?20marks

show calculations on how to do

Answer 1

Date	DJIA	Weekly Returns	Google	Weekly Returns	AAPL	Weekly Returns
5/27/2019	24815.0		1103.63		175.07
6/3/2019	25983.9	4.71%	1066.04	-3.41%	190.15	8.61%
6/10/2019	26089.6	0.41%	1085.35	1.81%	192.74	1.36%
6/17/2019	26719.1	2.41%	1121.88	3.37%	198.78	3.13%
6/24/2019	26600.0	-0.45%	1080.91	-3.65%	197.92	-0.43%
7/1/2019	26922.1	1.21%	1131.59	4.69%	204.23	3.19%
7/8/2019	27332.0	1.52%	1144.90	1.18%	203.30	-0.46%
7/15/2019	27154.2	-0.65%	1130.10	-1.29%	202.59	-0.35%
7/22/2019	27192.4	0.14%	1250.41	10.65%	207.74	2.54%
7/29/2019	26485.0	-2.60%	1193.99	-4.51%	204.02	-1.79%
8/5/2019	26287.4	-0.75%	1188.01	-0.50%	200.99	-1.49%
8/12/2019	25886.0	-1.53%	1177.60	-0.88%	206.50	2.74%
8/19/2019	25628.9	-0.99%	1151.29	-2.23%	202.64	-1.87%
8/26/2019	26403.3	3.02%	1188.10	3.20%	208.74	3.01%
9/2/2019	26797.5	1.49%	1204.93	1.42%	213.26	2.17%
9/9/2019	27219.5	1.57%	1239.56	2.87%	218.75	2.57%
9/16/2019	26935.1	-1.05%	1229.93	-0.78%	217.73	-0.47%
9/23/2019	26820.3	-0.43%	1225.09	-0.39%	218.82	0.50%
9/30/2019	26573.7	-0.92%	1209.00	-1.31%	227.01	3.74%
10/7/2019	26816.6	0.91%	1215.45	0.53%	236.21	4.05%
10/14/2019	26770.2	-0.17%	1245.49	2.47%	236.41	0.08%
10/21/2019	26958.1	0.70%	1265.13	1.58%	246.58	4.30%
10/28/2019	27347.4	1.44%	1273.74	0.68%	255.82	3.75%
11/4/2019	27681.2	1.22%	1311.37	2.95%	260.14	1.69%
11/11/2019	28004.9	1.17%	1334.87	1.79%	265.76	2.16%
11/18/2019	27875.6	-0.46%	1295.34	-2.96%	261.78	-1.50%
11/25/2019	28051.4	0.63%	1304.96	0.74%	267.25	2.09%
12/2/2019	28015.1	-0.13%	1340.62	2.73%	270.71	1.29%
12/9/2019	28135.4	0.43%	1347.83	0.54%	275.15	1.64%
12/16/2019	28455.1	1.14%	1349.59	0.13%	279.44	1.56%
12/23/2019	28645.3	0.67%	1351.89	0.17%	289.80	3.71%
12/30/2019	28634.9	-0.04%	1360.66	0.65%	297.43	2.63%
1/6/2020	28823.8	0.66%	1429.73	5.08%	310.33	4.34%
1/13/2020	29348.1	1.82%	1480.39	3.54%	318.73	2.71%
1/20/2020	28989.7	-1.22%	1466.71	-0.92%	318.31	-0.13%
1/27/2020	28256.0	-2.53%	1434.23	-2.21%	309.51	-2.76%
2/3/2020	29102.5	3.00%	1479.23	3.14%	320.03	3.40%
2/10/2020	29398.1	1.02%	1520.74	2.81%	324.95	1.54%
2/17/2020	28992.4	-1.38%	1485.11	-2.34%	313.05	-3.66%
2/24/2020	25409.4	-12.36%	1339.33	-9.82%	273.36	-12.68%
3/2/2020	25864.8	1.79%	1298.41	-3.06%	289.03	5.73%
3/9/2020	23185.6	-10.36%	1219.73	-6.06%	277.97	-3.83%
3/16/2020	19174.0	-17.30%	1072.32	-12.09%	229.24	-17.53%
3/23/2020	21636.8	12.84%	1110.71	3.58%	247.74	8.07%
3/30/2020	21052.5	-2.70%	1097.88	-1.16%	241.41	-2.56%
4/6/2020	23719.4	12.67%	1211.45	10.34%	267.99	11.01%
4/13/2020	24242.5	2.21%	1283.25	5.93%	282.80	5.53%
4/20/2020	23775.3	-1.93%	1279.31	-0.31%	282.97	0.06%
4/27/2020	23723.7	-0.22%	1320.61	3.23%	289.07	2.16%
5/4/2020	24331.3	2.56%	1388.37	5.13%	310.13	7.29%
5/11/2020	23685.4	-2.65%	1373.19	-1.09%	307.71	-0.78%
5/18/2020	24465.2	3.29%	1410.42	2.71%	318.89	3.63%
5/25/2020	25548.3	4.43%	1417.84	0.53%	318.11	-0.24%
5/28/2020	25732.2	0.72%	1437.15	1.36%	322.86	1.49%
Standard Deviation	4.47%		3.94%		4.46%

BETA

0.85

0.89

Beta = slope(known y's, known x's) = slope(index returns, stock returns) (Bigger beta more risk)

Standard deviation = stdev(returns) (Bigger standard deviation, more risk)

from above data and calculations, it can be inferred that AAPL i.e. apple stock is more risky than google stock