Financial Management-

Risk Return Analysis Project 1

Submitted to Professor Rajneesh Jha
Course code SLF1501
Topic: Risk Return Analysis SAFARI INDUSTRIES (INDIA) LTD AND V-MART
RETAIL LTD And BSE Sensex

Submitted by:

Name: SUKANYA VANAKMAMUDI

Enrolment No. :21BSPHH01C1434
Section: C
Email Id: vankamamudisukanya.raman21h@ibsindia.org
Mobile No.:7776885111
 Table
1
Name of the Name of the
S.NO Industry Segment   S.NO
Company Index
SAFARI
INDUSTRIE MANUFACTURIN
1 S (INDIA) G INDUSTRY
PACKAGING   1 BSE S&P
LTD.
V-MART
2 RETAIL FMCG INDUSTRY  FOOD  
LTD.

SAFARI INDUSTRIES (INDIA) LTD. is a company based in India.

SAFARI INDUSTRIES (INDIA) LTD., founded in 2007, has established itself as one of India's leading
suppliers of trolley bags. The supplier is one of the top sellers of the listed products and is based in
Mumbai, Maharashtra. SAFARI INDUSTRIES (INDIA) LTD. is on Trade India's list of recognised
vendors, supplying high-quality 2 Wheel Trolley Bag and other products. For the highest quality
products and service, buy trolley bags in bulk from us.

COMPANY HISTORY OF V-MART RETAIL LTD. (VMART)

V-Mart Retail Ltd is a chain of stores in India that sells ready-to-wear clothing, accessories, and
other items. It is in the business of 'Value Retailing’. V-Mart was one of the first retailers to open
stores in minor Indian towns and cities such as Sultanpur, Ujjain, and Motahari. With a chain of
'value retail' departmental stores offering clothes, general products, and Kirana catering to the
entire family, the company mostly operates in Tier-II and Tier-III cities.

Table 2

Company 1        

Average Daily Annualized Standard

Year Average Daily Return Annualized Return
Standard deviation deviation
2016 -0.002942336 -0.658884977 0.07357308 1.405611714

2017 0.00062722 0.154922281 0.071878529 1.37323736

2018 -0.002694903 -0.660251169 0.068880139 1.315953212

2019 -0.000713794 -0.172738132 0.018809885 0.359362351

2020 -0.0001444 -0.036114083 0.034078127 0.651061701

INTERPRETATION:
From above table we can see that the average daily return & annualised return in 2016
was -0.002942336 & -0.658884977 the investor was bearing losses and it slightly increased
in 2017 0.00062722 and from 2018 to 2020 the investor faced losses. This is because the
company during that period was facing financial losses and so the investor in his investors.
Even Average standard deviation means there was low risk. And in annualized standard
deviation there was high risk.

Table 3
Company
       
2
Average Daily Annualized Standard
Year Average Daily Return Annualized Return
Standard Deviation Deviation
2016 -0.004914859 -0.834427529 0.068046704 1.300030454
2017 0.001085557 0.268132509 0.071661135 1.369084056
2018 -0.001197288 -0.293335637 0.072594782 1.386921357
2019 -0.001590101 -0.384804489 0.023344637 0.445998672
2020 0.002087419 0.521854755 0.030525855 0.583195642

INTERPRETATION:
From above table we can see that the average daily return & annualised return in 2016
was -0.004914859 & -0.834427529 the investor was bearing losses and it slightly increased
in 2017 0.001085557 and 0.268132509 from 2018 to 2019 the investor faced losses. And in
2020 it increased to 0.002087419 and 0.521854755. This is because the company during
that period was facing financial losses and so the investor in his investors. Even Average
standard deviation means there was low risk. And in annualized standard deviation there
was high risk.

Table 4
Market
       
Index
Average Daily Average Daily Annualized Standard
Year Annualized Return
Return Standard deviation deviation
2016 0.000115563 0.043080071 0.009403504 0.179653699
2017 -0.0030189 -0.745668178 0.063942282 1.221615582
2018 0.000294986 0.072271638 0.007931437 0.151529888
2019 0.000603375 0.146016862 0.008694205 0.166102559
2020 0.000786343 0.196585796 0.020167558 0.385300658
INTERPRETATION:
From above table we can see that the returns in 2016 ,2018, 2019,2020 is positive that
means in those years the prices of most the stocks in that year went up. In 2017 the
returns are negative that means that the prices of stocks went down, and in all years there
was low risk except for 2017,

Table 5: Correlations

Year Correl - C1, C2 Correl - C1, Index Correl - C2, Index

2016 0.840565547 0.014142994 0.018762381

2017 0.830325185 0.881474016 0.892649583
2018 0.004507161 0.00000593 0.000007511
2019 0.185516163 -0.028082123 0.080525535
2020 0.000333965 0.0000345540 -0.000020518
Stock correlation describes the relationship that exists between two stocks and their
respective price movements. It can also refer to the relationship between stocks and other
asset classes, such as bonds or real estate.
INTERPRETATION:
Stocks of SAFARI INDUSTRIES and V-MART retail ltd from 2016 to 2020 had positive
relation that means they were moderately related in shorts both were moving in same
direction. If we compare SAFARI INDUSTRIES and BSE SENSEX in 2016, 2017, 2018,2020
they had positive relation that means they were moderately relation in shorts both were
moving in same direction but in 2017 it was negative correlation that means they were in
opposite direction. And if we compare V-MART AND BSE SENSEX from 2016 to 2019 they
had positive correlation that means they were moderately relation in shorts both were
moving in same direction but in 2020 they had negative correlation that means they were
in opposite direction.

Table 6

Minimum Variance Portfolio Return and Risk - C1 and C2  

Year Weight of C1 Weight of C2 Return Risk
2016 0.259471782 0.740528218 -0.788879191 0.067237043
2017 0.491074198 0.508925802 0.212537887 0.068656979
2018 0.679801703 0.320198297 -0.54276544 0.06778377
2019 0.629889073 0.370110927 -0.251226208 0.063350278
2020 0.41484503 0.58515497 0.290384155 0.136453795
A minimum variance portfolio indicates a well-diversified portfolio that consists of
individually risky assets, which are hedged when traded together, resulting in the lowest
possible risk for the rate of expected return.

INTERPRETATION:
In 2016 and 2018,2019 the investor diversified his assets in SAFARI INDUSTRIES LTD AND
V-MART RETAIL LTD such a way that he faced negative return that means he was in loss
even though risk was low. But in 2017 and 2020 he got positive returns. And risk was
moderately low.

Table 7

Minimum Variance Portfolio Return and Risk - C1 and Index  

Year Weight of C1 Weight of Index Return Risk

2016 0.014345718 0.985654282 0.033009878 0.009343325
2017 0.032358414 0.967641586 -0.716526499 0.063932845
2018 0.002426025 0.997573975 0.070494519 0.007898196
2019 0.18281862 0.81718138 0.087742514 0.078057993
2020 0.268554259 0.731445741 0.134093253 0.170047293

INTERPRETATION:
In 2017 the investor diversified his assets in SAFARI INDUSTRIES AND BSE SENSEX in such a
way that he faced negative return that means he was in loss even though risk was low.
But in 2016,2018, 2019 and 2020 he got positive returns. And risk was moderately low.

Table 8
Minimum Variance Portfolio Return and Risk - C2 and Index  
Year Weight of C2 Weight of Index Return Risk
2016 0.01627775 0.98372225 0.028796221 0.009337127
2017 0.033258926 0.966741074 -0.711950256 0.063952171
2018 0.012191868 0.987808132 0.067814202 0.150629019
2019 0.100779262 0.899220738 0.092521078 0.019049378
2020 0.285110132 0.714889868 0.289323272 0.051611628
.

INTERPRETATION:
In 2017 the investor diversified his assets in V-MART RETAIL LTD AND BSE SENSEX in such
a way that he faced negative return that means he was in loss even though risk was low.
But in 2016,2018, 2019 and 2020 he got positive returns. And risk was moderately low.

Table 9
Beta
Year C1 C2
2016 0.110654877 0.135770466
2017 0.990878856 1.000406617
2018 0.818575857 1.092779968
2019 -0.060755582 0.216217509
2020 0.143554035 -0.076356913
Beta is a numeric value that measures the fluctuations of a stock to changes in the overall
stock market. 
INTERPRETATION:
In 2016, 2017, 2018, 2020 (OF C1 THAT IS SAFARI INDUSTRIES LTD) the beta is less that 1
that means the stock price is less volatile than overall market. Whereas in 2019 the beta is
less than 0 it indicates that stock of SAFARI INDUSTRIES LTD has inverse relation to the
market (i.e., BSE SENSEX OF 2019), it is less likely but possible .
In 2016 & 2019 (OF C2 THAT IS V-MART RETAIL LTD) the beta is less than 1 that means the
stock price is less volatile than overall market. Whereas in 2020 the beta is less than 0 it
indicates that stock of V-MART RETAIL LTD has inverse relation to the market (i.e. BSE
SENSEX OF 2019), it is less likely but possible. But in 2017 and 2018 the beta is more than 0
that is it equal to 1 that means the price of the stock tends to move with the market .

Table 10

Expected Return using CAPM

Year C1 C2
2016 0.06035109 0.059863347
2017 -0.73829676 0.011989489
2018 -0.529126658 -0.326350056
2019 0.07679203 -0.034215062
2020 0.146990407 0.022741288

The Capital Asset Pricing Model (CAPM) describes the relationship between systematic
risk and expected return for assets, particularly stocks.
INTERPRETATION:
In 2016,2019,2020 the investor has positive expected return for assets but in 2017 and
2018 he had negative expected returns for assets (in C1 that is Safari Industries ltd).And is
(C2 that is V-MART RETAIL LTD ) 2016,2017,2020 he received positive expected return.
Whereas in 2018 and 2019 it has negative returns.