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Stockportfolio performance
Throughthe analysis of the data we obtained from our portfolio returns itwas realized that the company has a high Sharpe ratio which isindicative of the average return that is achieved in excess of therisk free rate for every unit of total risk or volatility. When therisk free rate was subtracted from the mean return, it is possible toisolate the performance that is associated with the activities thatinvolve risk-taking. From our results, it is clear that Apple, Inc.,Alphabet, Inc., Chipotle Mexican Grill Inc., and ProShares UltraProS&P 500 ETF are companies that have more risk takingopportunities than the other companies in the same group with them. Another indicator of a company’s performance is the Capital AssetPricing Model. The model is used in describing the how risk isrelated to the returns expected. It also applies during riskysecurities pricing. Because investors intend to gain compensationfrom the time value of money and risk, it is important to use CAPM inorder to calculate the amount that should be given to the investors.The risk free rate, the rf, represents the time value of money. Itcompensates the investors for their placement of their money in anygiven investment over any given period of time. From the results ofour study, we discovered that the companies in our portfolio have theability to pay investors adequately and still make descent profitsfrom the returns. Due to the negative as well as thepositive values in our portfolio returns it can be said that ourportfolio is active. It is not tangent because most of our virtualinvestments recorded too low levels of income and share price. Thetangency of our portfolio is not that stable and therefore it isinsignificant to regard it as a major function of economic expansionor an evaluation tool for the enactment of our portfolio. Itis not easy to state specifically which particular variable orformula correctly or effectively or relevant measures our portfolioperformance. However, the Treynor ratio and the CAPM actually givevalues that can be effectively understood and applied in real timemonitoring the situations. With these measures, proper changes can bemade and improvements proposed. Alpha, beta and gamma give quiteinsignificant figures that cannot be relied upon to give any properappraisal of the portfolio. The calculations of the parametersminimize the portfolio returns to way below 1% even for the strongestcompanies. The most insignificant measure is the (Rm-Rf)2.It gives values that are almost zero and when they are used inmeasurement together with the bigger tools, they only work to destroythe data that are obtained. The beta is a risk measure that is ableto compare the returns from an asset to the condition of the marketover a given period of time. It also makes comparisons to poverty andthe market premium. Market premium is referred to as theRm-rf. Just as it is important for every investor to keep trackof their portfolio, the success any given firm and its performancealso is important. The variables and formulas for the appraisal ofthe performance of an organization have shown great potential indetermining the future of the organization and the possible number ofinvestors to the organization. These measurement options can helpreconsider the diverse features of the industry that may in turninfluence our decision on which companies to continue holding withinour portfolio and the ones that we need to stop investing in becauseof its low profitability. Continuing to invest in organizations thatalready show too low average returns is a very poor businessstrategy.