125250 Financial Modelling|Standard Deviation Assessment Answer

You areexpected to perform the followingcalculations:Q1. Weekly returns 1)Calculate the compounded weekly returnsof the two companiesrespectively.Q2. Summary statistics 1)Obtain the summary statistics of the weeklyreturns forthe two companiesrespectivelyQ3. Histogram 1)Create the Histogram for the two companies’ returnsrespectively. 2)Briefly discuss the results(please discuss whether the distribution of the returns follow normal distributionor not, any obvious evidence that violates normal distribution). Q4. t‐test1)Perform “t-Test: Paired Two Sample for Means” to examine whether the mean value of the two companies’ returnsarestatistically differentfrom each other.)Briefly discuss the results. Q5. Portfolio analysis (4mark)1)Using weekly returns obtained from Q1,construct a portfolio includes only the two stocksyou selected. Calculate the portfolio weeklyreturns assuming the weight on one stockincreases from 0% to 100% at an incremental of 10% in the portfolio.2)Using the weekly portfolio returns obtainedin Step 1), calculate the average portfolio return, variance, and standard deviation of the portfolio.Q6. Minimum variance portfolio1)Estimate the minimum variance portfolio(Calculate the weight on the two stocks respectively to construct theminimum variance portfolio).Q7. Optimalportfolio1)Estimate the optimal portfolio basing on the Sharperatio(Calculate the weight on the two stocks respectively to construct theportfoliothat maximizes theSharpe ratio)