Main task
The aim of this assignment is to elaborate a report describing stock market price evolution of two publicly traded companies. Prepare a business report that will answer the assessment questions and that should be supported with all the necessary analysis (plots, tables etc.). Please follow the order of questions and provide a clear answer to each of them, attach an excel file with all the calculations conducted. Please notice that the excel file alone will not be evaluated as the assessment should be elaborated using the standard business report format.
The aim of this assignment is to elaborate a report describing stock market price evolution of two publicly traded companies.
Choose two well-known companies listed on the New York stock exchange (or any other stock exchange).
Find the data for its daily stock price for the period of at least 5 last years (you need to use the same time span for both companies). I recommend using the finance.yahoo.com web-page that allow to download a data for publicly traded companies for free. (please see belowhow to download data from finance.yahoo.com). You can also use Google Finance and spreadsheet in Google to download the data as well.
You will need to convert stock prices into returns as than the analysis for two companies will make sense – the easiest way to calculate the daily return is to take:
(closing price of day t – closing price of day (t-1) the previous day) / closing price of day (t-1) the previous day
Example – from the table at the end of the document: JP Morgan closing price on 30/10/2020 was $96.77 and the closing price on 29/10/2020 was $97.17 therefore the daily return on that day was:
(96.77 – 97.17) / 97.17 = -0.00412 or -0.41%
Compute all the return in % terms. In such way you will generate the time series of daily returns for these two companies. Please check if the data span is of the same length (important!).
Now please prepare a business report that should be supported with all the necessary analysis (plots, tables etc.). The excel file must be submitted as well however will not be graded independently as all the solutions and comments must be presented in the business report.
The Business report should be a professional document that contains the following points/answers to the questions:
Company description and price evolution (30 points):
1. Describe briefly both companies – industry, product, market position (20 points)
2. Present the graph of both the daily price evolution and daily returns – comment on the price changes and the daily returns. Do you observe any extreme changes? What would be an explanation for them (please support any facts that can support your answer) (10 points)
Statistical analysis (70 points):
Please prepare the measures of the central tendency, dispersion and association of variables and based on this answer the following questions:
3. What is the mean stock price return for both companies? What is the meaning of the number you have obtained? Please compare the results obtained for both companies (10 points)
4. What is the median stock price return for both companies? What is the meaning of the number you have obtained? Please compare the results obtained for both companies (10 points)
5. Construct a frequency distribution of your choice (the intervals should be chosen by you for showing the distribution of the data in the best way) and percent frequency distribution of the stock price return for the indicated period for both companies. Evaluate the results and compare. (10 points)
6. What is the most frequent stock price return range you observe for each company? Evaluate the results and compare (10 points)
7. What is the variance and the standard deviation of the stock price returns for the indicated period for both companies? Evaluate the results and compare. What can we say about the volatility of the stock price returns for these two companies (10 points).
8. Please think about the relationship between the stock prices (or stock price returns) of both companies. Would you expect the correlation between these two companies to be positive / negative? Strong or weak? Please calculate the correlation coefficient. What is the meaning of the results you have obtained? Is that what you have expected? (10 points).
9. If you should take a decision about the investment in any of these two companies what would be your decision? Justify your answer (10 points).
Please remember to support your analysis with all the necessary graphs.
Appendix
In finance.yahoo.com select a company and click on ‘Historical Data’. You can customize the time period and then click on ‘Download’.
- Other details:
-Additional file format for additional deliverables: Excel spreadscheet (.xlsx).
-Font size 12
-Double-spaced
-Number of words: there is no a minimum required
-All refencing and citations require Harvard referencing style.
