Funds Management and Portfolio Selection Assignment

Funds Management and Portfolio Selection - Assignment exercisingFMG has regression aim of 2.1, which implies that an increase in the market returns by one percent will settlement to an increase in its boilersuit returns by 2.1%. A positive regression between market and pluss, consort correlation and data theory, results to assets returns moving away those of the market. Consequently, higher regression levels imply greater impacts from the market. The performance of FMG provoke be associated to its long weight in all ordinary market, since it is a confederation associated with mining, processing, as hearty as transportation of iron ore within the region of Pilbara, Western Australia. Being an iron ore exporting company all over the world, an improvement in the global economy is likely to result increases in the level of consumption, which will be active positively on the prices of FMG and index (Brailsford, Heaney & Chris, 2011).In addition, this effect is also likely to aff ect AXA in a similar manner, since it is also one of the companies with notable regression. AXA is the top most wealth management company in Australia and New Zealand with capital management as its integral objective. Its steady improvement is the overall performance in the Australian stock market can be closely associated with the companys strong capital position. Comparing to some other industries, mining industry is the biggest market in Australian, and it takes a huge shape in stock market. This is a reason behind FMGs higher regress than other companies. Next, these companies set up to ten difference portfolios and the beta decrease with the portfolio extending (Sutton, 2009).When extra stock is added in from each one portfolio, the level of beta reduces from 0.5 to 0.1. As a general measure of stocks systematic risk, Beta is defined as the quantity of systematic risk present in a certain asset respective of the risky asset. A beta level below 1.0 show a stock with dishono r amount of systematic risk compared to the market, the reverse is true.The results