Measuring Risk and Return of Stocks : Comparative analysis of Petroleum and Fertilizer sectors of Pakistan

Abstract

The current research paper studied that how stock prices of Petroleum and Fertilizer sectors of Pakistan is affected due to Risk, Inflation Rate, Exchange Rate and Interest Rate. This research paper also helpful to the investors as well as some other institutions and individuals who are involved in buying and selling of securities of stocks for the selection of Portfolio from Both Sectors. A sample of five companies are taken from each sectors. Time series and Historical data from 2010 to 2014 is used for the Calculation of Mean return, standard deviation and coefficient of variation to analyses the volatility in stocks. SPSS software is used to see the impact of selected variables like inflation, interest and exchange rate on stock prices of Petroleum and Fertilizer Sectors of Pakistan. Results shows that from Petroleum sector Pakistan Petroleum is best performing company while Mari Petroleum is worst performing company. Similarly in Fertilizer sector Fauji Fertilizer is best performing Company and Engro is not performing well because its mean return is in negative and if investor want to make portfolio from both sectors then investor should invest in the stocks of Pakistan Petroleum Limited and Fauji Fertilizer Limited Because these companies are best performing companies and less risky as compare to the other companies.