Abstract
This research paper examines the risk-return attributes of certain financial stocks listed on the Bombay Stock Exchange (BSE) Finance Index. This research intends to fill a gap in our knowledge by analysing the sector’s stocks in detail, looking for patterns in their performance related to market trends, volatility, and correlation to the overall finance index. The research employs statistical indicators such as standard deviation and correlation analysis for the four companies: Bajaj Finance, Shriram Finance, CholaFin, and Bajaj Holdings. The standard deviation assesses the level of risk linked to the returns of each stock, whereas correlation coefficients gauge the magnitude and direction of the connection between the returns of the stocks and the BSE Finance Index. The results demonstrate notable disparities in risk profiles across the companies, with Bajaj Holdings exhibiting the strongest correlation and the least amount of volatility, rendering it a more secure investment choice. CholaFin, on the other hand, demonstrates the most volatility and a less strong correlation with the index, suggesting a greater degree of risk. The study emphasises that Bajaj Finance and Shriram Finance exhibit significant positive correlations with the index, but their risk profiles vary marginally. This offers significant insights for investors and portfolio managers who aim to achieve a harmonious equilibrium between risk and return in their investment strategies within the finance industry.
Published Version
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