Assignment Task
You are required to present the risk-reduction benefits of portfolio diversification by constructing two different portfolios comprising of two shares each from FTSE100 companies. The first portfolio comprises of stocks whose returns are positively correlated, and the second portfolio comprises of stocks whose returns are negatively correlated.
You are required to use monthly data of share prices of the companies in the portfolio over the last FIVE years (for example, from April 2019 to March 2024) using Databases such as Quandl.com, Bloomberg, Yahoo Finance, or Google Finance (indicate the database you are using). Make sure you have 60 observations of returns for every selected company. The list of potential companies is provided in a separate spreadsheet.
The report must address the following:
- Outline in the report the choice of companies you have made in creating the portfolios and provide an explanation and/or justification about why the particular portfolio was constructed.
- Compute the monthly percentage price returns for each of the selected companies.
- Compute the average monthly return for each stock and the standard deviation of monthly returns.
- Compute the covariance and correlation between the pair of stocks selected in each portfolio.
- Assuming equal weight between the pair of stocks, compute the portfolio return and portfolio standard deviation for each portfolio. Compare the performance of two portfolios over the five-year period using reward-to-volatility (Sharpe) ratio and interpret your findings.
- For each portfolio, graphically present portfolio effect by plotting portfolio return (vertical axis) and portfolio standard deviation (horizontal axis) by varying portfolio proportions across two assets. (You can assume the following weights: 100%:0%, 75%:25%, 50%:50%, 25%:75%, 0%:100%). Draw the Efficient Frontier and compute the Minimum-variance portfolio.
- Provide recommendations based on the academic literature about possible measures and strategies you can use for the enhancement of risk-return performance of your portfolio. Discuss your results based on your understanding in relation to the concept and theory of portfolio diversification. You may assume that all investors and investments are based in the UK.
Use of Artificial Intelligence
The assessment falls in the ‘Amber’ for the use of Artificial Intelligence, that is, AI use is allowed to assist in the development of an assessment in line with the following guidance.
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- Inspiration: using AI tools to generate prompts (including reflective and creative prompts), search terms, key words, or means of inspiring ideas, such as: images, sounds, short pieces of music, short pieces of text, or quotations.
- Planning and management: using AI tools to suggest a title, structure, subheadings, or themes, to generate templates, to suggest processes for task management, or to generate prompts to assist thinking through assessment structure or task management.
- Sources: using AI tools to search, generate, or suggest sources for gathering required information.
- Analysis: using AI tools to analyse anonymised data (qualitative or quantitative), to find themes, patterns, or motifs in the work of others, or to generate prompts for analysis.
- Presentation: using AI tools to present data in an accessible format such as by generating, graphs, charts, tables, slides, images, word-clouds, animations, or captions.
- Checking: using AI tools to proofread or check work, to generate prompts for proofreading or checking work, or to suggest improvements and feedback on work.
Student Acknowledgement of Use of AI Tools
Students must acknowledge the use of AI tools by clearly stating, before any references or bibliography, which AI tools have been used and a brief explanation of how these are used in the development of assignment, in the form of a simple table as below:
| Tool | How used in this assignment |
|---|---|
| e.g. ChatGPT-3.5 | Key word search on topics related to learning outcomes |
| e.g. Microsoft Copilot | Analysing data to find themes and patterns |
PLEASE NOTE: If you are resitting this assessment, the submission should be a rework of the original attempt (following feedback), accompanied by a reflective piece (up to 500 words) detailing the changes being made and an understanding of how the work now meets the ILOs. The reflection is to indicate to the marker how the work has now been improved using the feedback so that it meets the learning outcomes. Such reflective piece is not assessed.
Submission Instructions:
The assessment must be submitted in MS-Word/PDF and Excel formats via TURNITIN and HANDIN Submission Links respectively, latest by 18:00 on 07/04/2025. No paper copies are required. You can access the submission link in the ‘Individual Coursework’ section under the ‘Materials’.
- Your coursework will be given a zero mark if you do not submit a copy through Turnitin. Please take care to ensure that you have fully submitted your work.
- All work submitted after the submission deadline without a valid and approved reason (see below) will be given a mark of zero.
- Kindly note that you are required to submit your report in WORD or PDF format to the relevant Turnitin link and the EXCEL file to the second Handin link. Both the links will be provided under ‘Coursework Submission Links’.
This document is intended for Coventry University Group students for their own use in completing their assessed work for this module. It should not be passed to third parties or posted on any website. Page 4 of 8
- The University wants you to do your best. However, we know that sometimes events happen which means that you cannot submit your coursework by the deadline – these events should be beyond your control and not easy to predict. If this happens, you can apply for an extension to your deadline for up to two weeks, or if you need longer, you can apply for a deferral, which takes you to the next assessment period (for example, to the resit period following the main Assessment Boards). You must apply before the deadline. You will find information about the process and what is or is not considered to be an event beyond your control at https://share.coventry.ac.uk/students/Registry/Pages/Deferrals-andExtension.aspx
- Students MUST keep a copy and/or an electronic file of their assignment.
- Checks will be made on your work using anti-plagiarism software and approved plagiarism checking websites.
Marking and Feedback
How will my assignment be marked?
Your assignment will be marked by the module team.
How will I receive my grades and feedback?
Provisional marks will be released once internally moderated.
Feedback will be provided by the module team alongside grades release. Students can access their feedback by visiting the Journey > Assignment in their Aula module. Select the assignment you’d like to view – a Turnitin popup will be launched. Click on the Grade to the right of the screen to open Feedback Studio and see detailed feedback.
Your provisional marks and feedback should be available within 2 weeks (10 working days) from the due date.
What will I be marked against?
Details of the marking criteria for this task can be found at the bottom of this assignment brief.
Assessed Module Learning Outcomes
The Learning Outcomes for this module align to the marking criteria which can be found at the end of this brief. Ensure you understand the marking criteria to ensure successful achievement of the assessment task. The following module learning outcomes are assessed in this task:
- Apply in detail fundamental analysis to determine the advantages of diversification.
- Design and construct an optimal portfolio.
- Critically evaluate the performance of a portfolio.
This document is intended for Coventry University Group students for their own use in completing their assessed work for this module. It should not be passed to third parties or posted on any website. Page 5 of 8
Assignment Support and Academic Integrity
If you have any questions about this assignment please see the Student Guidance on Coursework for more information.
Spelling, Punctuation, and Grammar:
You are expected to use effective, accurate, and appropriate language within this assessment task.
Academic Integrity:
The work you submit must be your own, or in the case of groupwork, that of your group. All sources of information need to be acknowledged and attributed; therefore, you must provide references for all sources of information and acknowledge any tools used in the production of your work, including Artificial Intelligence (AI). We use detection software and make routine checks for evidence of academic misconduct.
Definitions of academic misconduct, including plagiarism, self-plagiarism, and collusion can be found on the Student Portal. All cases of suspected academic misconduct are referred for investigation, the outcomes of which can have profound consequences to your studies. For more information on academic integrity please visit the Academic and Research Integrity section of the Student Portal.
Support for Students with Disabilities or Additional Needs:
If you have a disability, long-term health condition, specific learning difference, mental health diagnosis or symptoms and have discussed your support needs with health and wellbeing you may be able to access support that will help with your studies.
If you feel you may benefit from additional support, but have not disclosed a disability to the University, or have disclosed but are yet to discuss your support needs it is important to let us know so we can provide the right support for your circumstances. Visit the Student Portal to find out more.
Unable to Submit on Time?
The University wants you to do your best. However, we know that sometimes events happen which mean that you cannot submit your assessment by the deadline or sit a scheduled exam. If you think this might be the case, guidance on understanding what counts as an extenuating circumstance, and how to apply is available on the Student Portal.