How to Maximize Your Return by Investing in the Pharmaceutical and Natural Resource Industries
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Authors
Long, Charles
Nardella, Michael
Issue Date
2023-04-28
Type
Other
Language
en_US
Keywords
Scholarship Sewanee 2023 , University of the South , Maximizing Returns , Researching Sectors of the Market
Alternative Title
Abstract
In this paper, we will be discussing the five-year performance of five stocks that include two different sectors: natural resources and the pharmaceutical sector. We chose these sectors because of the positive returns on their stock prices that have been shown since Covid, as well as the fact that pharmaceutical companies are frequently creating new medicine and natural resources. The performance of these five stocks will be evaluated through R-studio using various financial models, including Portfolio Theory, the Capital Asset Pricing Model, and Factor Model. We will first employ an investment strategy that is contingent upon maximizing return and by choosing a variation of risky and stable stocks. By using a strategy as such, we will be able to hedge some of the systematic risk present with investing into a singular stock. However, a model may predict how much of the original investment to allocate into each of the stocks in order to achieve our goal of maximizing return. While looking at the weights and the historical return averages for each of these stocks, an expected return can be calculated to determine which to invest in. We will compare the portfolio ROIs at the end of the holding periods to determine which model has given us the most beneficial return. Upon completion of carrying out these models, we can then compare which ones allowed for us to receive the most return, and what could have been done to prevent potential loss.
Description
Citation
Publisher
University of the South