Introduction;

This report is all about the risk assessment and stock valuation . In this report the real life
concepts of risk and return are applied and the analysis the stocks through its average return,
standard deviation, beta, coefficient of variation, sharp ratio and treynor’s ratio is made. Then
these stocks are chosen to make an portfolio and the same concpts of risk and return are
applied to analyse the portfolio. In the portfolio it is being analysed that the how that how
diversification effects the portfolio average return and its risk
Stock Selection;
We have selected five stocks of different industries. To make an comprehensive analysis the
stocks have been chosen of high and low risk. These stocks includes Unilever Pakistan Food,
Meezan Bank Limited, United Bank Limited, Tariq Glass Industries Limited, D.G Khan Cement
Company Limited. These all companies are the registered companies in Pakistan Stock
Exchange.
Data Collection:
The historical data related to these 5 stocks have been selected from the two websites. i.e
Pakistan Stock Exchange (PSX) and the investing.com. we have collected the data of these five
stocks of previous three years for making an better analysis. These three years are from 1-1-
2020 to 31-12-2022. We have collected the KSE-100 for the Calculation of Beta for making an
deep analysis.
Risk Measures:
Using an Excel spreadsheet, we calculated the different variables including, Average Return,
total risk, beta, coefficient of variation, sharp ratio and treynor’s ratio. These calculation have
not been made for stocks individually but also for a Portfolio as well.
Average Return;
We have calculated the average return in the excel sheet through the formula
=AVERAGE(C4:C38)*12. Here C4 to C38 represents the yield of stock of Unilever Pakistan Foods
Limited. We have used the same formula for the calculation of Average Return of other stocks
as well.
standard deviation;
 55.00%
Average Return
48.05%
45.00%

35.00%

25.00%

15.00%
11.68%
8.87%
5.00%

Unilever Pak- Meezan Bank United Bank Lim- Tariq Glass In- D.G Khan Ce- 1.56%
KSE100
-5.00% istan Foods Lim- Limited ited dustries Limited ment-4.55%
Company
ited Limited
Average Return 48.05% 11.68% -9.36%
-9.36% 8.87% -4.55% 1.56%
-15.00%

we have calculated the risk through using standard devaiation in excel sheet with the help of
the formula =STDEV(C4:C38)*SQRT(12) , here C4 to C38 represents the yields of the stocks of
Unilever Pakistan Foods Ltd and we have made this same calculations for other stocks as well.
Beta;
Using excel sheet we have calculated the beta with the formula =SLOPE(C4:C38,$H$4:$H$38) c4
to c38 represents the yields of stocks of Unilever Pakistan limited and h4 to h38 is the Karachi
stock echange 100 (KSE-100) and the same calculation have been made for other stocks also.

Total Risk
56.24%
55.00%

45.00% 44.13%
37.65% 36.36%
35.00% 33.02%

25.00% 22.59%

15.00%

5.00%

Unilever Pakistan Meezan Bank United Bank Lim- Tariq Glass Indus- D.G Khan Cement KSE100
Foods Limited Limited ited tries Limited Company Limited

Total Risk 37.65% 36.36% 33.02% 56.24% 44.13% 22.59%

 coefficient of variation;
it is measured by its formula = C45/C43 here C45 shows the total risk (standard deviation) and
C43 SHOWS the average return and this calculation have been done for all other stocks as well.

Chart Title
17.50 14.48
12.50
Beta 6.34
7.50
2.50
3.11 Sharp Ratio
1.10 1.00
0.6921 0.78 Pak-
0.7000 (2.50) Unilever Meezan Bank United Bank Tariq Glass In- D.G Khan Ce- KSE100
0.90 istan Foods Lim- Limited Limited dustries Limited ment Company
(3.53)
0.5000 (7.50) ited Limited
0.70
(12.50) 0.3213 (9.69)
0.3000
0.50 Series1 0.78 3.11 (3.53) 6.34 (9.69) 14.48
0.1576
0.1000
0.30
-0.1000 Unilever Pakistan Meezan Bank Lim- United Bank Lim- Tariq Glass Indus- D.G Khan Cement KSE100
0.10 Foods Limited ited ited tries Limited Company Limited
-0.1032
-0.3000 Unilever Pakistan Meezan Bank Lim- United Bank Lim- Tariq Glass Indus- D.G Khan Cement KSE100
(0.10) -0.2834
Sharp Ratio Foods
0.6921
Limited
(0.10) 0.3213
ited -0.2834
ited 0.1576
tries Limited Company-0.1032
Limited -0.9585
-0.5000 (0.21)
(0.30)
Beta (0.10) (0.36) (0.31)
(0.31) (0.44) (0.21) 1.00
-0.7000 (0.36)
(0.50) (0.44)
-0.9000
-0.9585
-1.1000

Sharp Ratio

Sharpe ratio;
we have calculated this sharp ratio in the excel sheet with the help of formula =(C43-C41)/C45,
in this C43 is the Average Return of Unilever Pakistan Foods Limited, C41 is the Risk free rate
and C45 is the Total Risk (Standard deviation) of the aUnilever foods limied. Similiarly, these
calculation have been made for other stocks same a like.

Treynor’s ratio;
We have calculated this in excel spreadsheet by using the formula =C43-$C$41/C49. In this
formula C43 demonstrate the Average Return of Unilever Pakistan Foods Limited, C41 is the
Risk free rate and C49 is the beta of the Unilever Pakistan Foods Limited. We have fixed the risk
free rate by putting the dollar sign to calculate the same treaynors ratio for other stocks as well.
Llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

Treynors rati o
2.75 2.64

2.25

1.75

1.25
0.99
0.75 0.73
0.62 0.59

0.25

Unilever Pakistan Meezan Bank Lim- United Bank Lim- Tariq Glass Indus- D.G Khan Cement (0.20)
KSE100
(0.25) Foods Limited ited ited tries Limited Company Limited

Series1 2.64 0.73 0.62 0.59 0.99 (0.20)