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Jupyter Project Case Solution & Answer

Jupyter Project Case Solution 

Introduction

For investment purposes and for saving sufficient amount of money for future, stock market is considered to be an attractive option. The stock market is a good investment option for many reasons. First of all, the investment in stock helps in fighting inflation, provide tax benefits and helps in generating wealth for future. Due to a compound return on investment, different investment can grow to a quite higher levels, as it seems possible. It would help generating a larger amount as retirement benefits. As a whole, it can be claimed that the investment in stock markets help the investors to meet the desired financial goals.

In order to maximize the return on investment while minimizing the risk, it is important invest in a diversified portfolio because putting all eggs in one based dis not a recommended investment strategy. It helps investors in a way that when the market under-performs the investors will generate a higher return thereby minimizing the losses. It’s a very tedious task to identify the securities, which can be included in an investors’ diversified portfolio. For a layman investor, it gets very hard to identify the potential securities from area of financial markets. In order to identify the securities with similar characteristics and correlation and with different characteristics and minimum correlation, cluster analysis is an effective technique to be utilized. . This will help investors better analyse stocks across different market segments and help protect against risks that could make the portfolio vulnerable to losses.

Problem statement

The investors face a problem, when it comes to selection of securities to be included in a diversified portfolio.The main objective of the investor is to get a highest possible return by minimizing the risk, which is only possible with the right selection of securities. It is recommended to avoid securities which inhibits similar correlation ad characteristics and to identify such correlation and similarity.

Objectives

The main objective of the research is to provide the investors with a personalized investment strategy thereby analyzing the stock market data and come with stock investments strategy based on correlation and grouping the stocks based on the attributes provided, and sharing insights about the characteristics of each group.

Methodology

In order to determine out the correlation and similar characteristics, the quantitative analysis has been performed over the data, provided by Trade&Ahead Company. The quantitative data analysis includes the cluster analysis, including the uni-variate and the bi-variate analysis, which has been performed over the data in order to determine which sticks present a similar characteristics and correlations and which stock do not, in order to come up with an optimal investment strategy for the clients.

Data Description

The data provided is of stock prices and some financial indicators like ROE, earnings per share, P/E ratio, etc.

Data Dictionary

  • Ticker Symbol: An abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market
  • Company: Name of the company
  • GICS Sector: The specific economic sector assigned to a company by the Global Industry Classification Standard (GICS) that best defines its business operations
  • GICS Sub Industry: The specific sub-industry group assigned to a company by the Global Industry Classification Standard (GICS) that best defines its business operations
  • Current Price: Current stock price in dollars
  • Price Change: Percentage change in the stock price in 13 weeks
  • Volatility: Standard deviation of the stock price over the past 13 weeks
  • ROE: A measure of financial performance calculated by dividing net income by shareholders’ equity (shareholders’ equity is equal to a company’s assets minus its debt)
  • Cash Ratio: The ratio of a company’s total reserves of cash and cash equivalents to its total current liabilities………………….
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