The College of Banking Financial Studies Investment
Management and Portfolio Analysis Investment Project
Submitted to:
Submitted by:
Date of Submission:
Table of Contents
Executive Summary.....................................................................................................................................3
1. Introduction.........................................................................................................................................4
1.1 Apple Company............................................................................................................................4
1.2 Investment Plan...........................................................................................................................5
1.3 Target Return on Investment.......................................................................................................5
2. History Performance Analysis..............................................................................................................5
2.1 Companies Share Price Performance...........................................................................................6
2.2 Index Performance.......................................................................................................................7
2.3 Fundamental Analysis..................................................................................................................8
2.4 Technical Analysis........................................................................................................................9
3. Investment Current Performance......................................................................................................11
4. Conclusion & Recommendation........................................................................................................12
5. Reflective Statement..........................................................................................................................12
Executive Summary
Apple is multinational company and due to its rapid growth in the last couple of decades, it
allures the investor towards it. For the purpose of better return on investment I decided to invest
in this company. Before investing the amount, a proper data analysis was conducted by
downloading financial data for a period of last two years. In order to calculate the expected
returns along with the market returns the company’s financial data was compared with the
datasets of S&P 500. The result showed the company is less volatile as compared with the
market.
1. Introduction
1.1 Apple Company
Apple is a multinational company which is formally registered with the title Apple Inc. This
company creates and markets consumer electronics and computer software. It was founded in
1976 in California, United States by Steve Jobs, Steve Wozniak, and Ronald Wayne. The history
of Apple is divided into three main period: Founding years (1976-1985), Struggling years (1985-
2001), and the years of Media Dominance (2001-present). During the founding years its products
were Apple II, Macintosh, and Power Mac lines. After a successful start, Apple faced huge
challenges due to low market shares and sales 1. However, with the return of Steve Jobs to the
company’s helm the years of struggles ended for Apple. Currently, the major products of Apple
are iPhone, iPod Touch, iPad, Apple Watches, and MacBook Computers. Due to these variety of
products Apple market capitalization has reached to 3 trillion USD 2 Below given is the official
logo of Apple company.
Source: Apple official logo3
There are a couple of reasons for choosing this company for investment, firstly it is very
important to note that the world we are currently living is the age of artificial intelligence (AI)
1
"Apple Inc.," Britannica, 2024, accessed 08, 2024, https://www.britannica.com/money/Apple-Inc.
2
"Apple Becomes First Company to Hit $3 Trillion Market Value," New York Times, 2022, accessed 08, 2024,
https://www.nytimes.com/2022/01/03/technology/apple-3-trillion-market-value.html.
3
Levy, "Apple Inc.."
and rapidly evolving technology. Secondly, Apple has significantly improved its standing in the
world of tech-makers and due to this reason, it can be estimated that investment in such a
company would be beneficial.
1.2 Investment Plan
An investment plan is a pathway that outlines the strategy of an investor regarding the allocation
of funds in a company. The investment plan explains the road map of achieving the financial
goals using a proper and carefully crafted structure. The investment plan begins with a goal, and
in this case the goals is to achieve as much as greater return on investment as possible. The
second this which the investment plan highlight is the factor of risk tolerance, this factor
indicates that probability of achieving the financial goal. Here in this case the data shows that the
company is risk tolerant due to its huge market capitalization. The third item deals with time
horizon, it means that the particular investment plan would be implemented for how much
duration. For this case the value of time horizon is for two years. While investing there are
multiple options which a company can offer to the investors like investing in stocks, bonds, real
estate or cash. For this case study, the investor is investing the amount in stocks.
1.3 Target Return on Investment
This agent in financial dataset is performance metric which is used to evaluate the efficiency or
profitability of an investment. It calculates the amount that will be returned to the investor for the
investment’s cost. The greater the company offers the value of return on investment the
beneficial it will be for the investors. In finance the value of ROI is expressed in terms of
percentage: a positive ROI indicates the profitability of an investment while a negative value
highlights a net loss4.
The formula to calculate ROI is:
Profit=SP−CP
ROI=Profit ÷Cost
In this case the date downloaded from Yahoo finance for Apple company for the last two year
shows that the market has greatly fluctuated due to various factors in the last couple of years.
The major contributing factors are COVID-19 which disrupted global supply chain along with
the Russia-Ukraine war and also the other issues 5. Due to which the sales of the company have
greatly been impacted.
4
"Return on Investment (ROI): How to Calculate It and What It Means," Investopedia, 2024, accessed 8, 2024,
https://www.investopedia.com/terms/r/returnoninvestment.asp.
5
"Apple suffers 10% drop in quarterly iPhone sales to start the year, biggest drop since pandemic," Los Angeles
Times, 2024, accessed 08, 2024, https://www.latimes.com/business/story/2024-05-02/apple-suffers-10-drop-in-
quarterly-iphone-sales-to-start-the-year-biggest-drop-since-pandemic.
2. History Performance Analysis
The historical financial data analysis is a very important step in shaping the financial
models and plays a crucial role in decision-making. Whatever the size of the business the
knowledge about financial data can be very helpful in understanding valuable insights
about the company. Before making any meaningful judgement about the company it is
very essential to understand the dataset and keep in mind the circumstances in which the
dataset was generated. The larger the dataset the better it would be to understand the
company’s performance and it would be easy to forecast the economic climate. As the
historical data indicates trends like sales figures, growth rates and expenses, thus using
these indicators it would be very easy to predict the company’s performance.
For this case study, the dataset of Apple was download from the Yahoo finance website 6.
The time frame for the dataset was set to two years: starting from May 08, 2022 to May
08, 2024. There were different options available for dataset like weekly, monthly, and
daily. For the purpose of this study the daily dataset was downloaded and after download
it was copied to Microsoft Excel file for data analysis. The following screenshot shows
the data which was download from Yahoo finance.
6
"Apple Inc. (AAPL)," 2024, accessed 08, 2024, https://finance.yahoo.com/quote/AAPL/history.
2.1 Companies Share Price Performance
A companies share price performance indicates the company’s stock price in the financial
markets. To evaluate this yardstick different parameters are used, some of these parameters are
explained below.
Price-to-Earnings Ratio: The price to earning ratio measures the company’s current
share price with respect to its per share earnings.
Split Adjustment Factor: The split adjustment factor encapsulates all splits since a
specific date and can affect the historical closing price of a stock.
Earnings Per Share: Evaluating the earnings per share is crucial in understanding a
company’s profitability and its impact on the stock price.
The share price performance of Apple Inc. (AAPL) has seen fluctuation over the years according
to the data indicated by Yahoo finance and Macrotrends 7. Over the three years the data shows
that the stock price has increase by 48.46% and with the increase in price performance rise up to
122.86%. The Yahoo finance data shows that on December 14, 2023, the stock value increased to
all time high value of 199.62.
The highlighted data shows that the High index recorded was on December 14, 2023
7
Finance, "Apple Inc. (AAPL)."
2.2 Index Performance
In financial data, the term index performance is carried out by comparing the performance of a
specific stock or financial instrument to the performance of a relevant index. Here in this case the
Apple adjusted closing stock price is compared with the dataset of S&P 500. Both these datasets
were downloaded from Yahoo finance. This comparison is mostly done for a period of five years
but here the investor is evaluating data for a period of last two years. The sample of the index
performance is shown below. For proper understanding it would be better to consult the excel
file. The adj close Apple dataset represents the dataset for Apple while the S&P dataset is
represented with “Adj Market.” Using the values of figure 1, the returns values were calculated
which is shown in the figure 2. The “Expected Returns” represents the Apple, while the “Market
Returns” shows the S&P 500 returns8.
Figure 1 Figure 2
2.3 Fundamental Analysis
Fundamental analysis in the field of field of financing refers to the method of evaluating the
value of an investment by properly utilizing the amount of data which is available publicly.
Several websites on the internet provide this facility to the customers, so that they investor
8
"S&P 500 (^GSPC)," Yahoo Finance, 2024, accessed 08, 2024, https://finance.yahoo.com/quote/%5EGSPC/history.
should properly understand about the market in which he or she is investing. For the purpose of
this study data about the company was downloaded from Yahoo finance website. The data which
was downloaded was then analyzed using Microsoft Excel. The importance of the fundamental
analysis of the market can be understood from the fact that it provides us knowledge whether the
entity is stable, liquid, solvent or profitable enough to warrant a monetary return. Microsoft
Excel provides various statistical tools like mean, standard deviation, variance, regression
analysis and covariance. These tools can be very helpful in understanding the market by
evaluating the historical data.
2.4 Technical Analysis
Technical analysis provides us the opportunity to understand the price trend and market patterns.
It is an analysis methodology for predicting the direction of prices through the study of past
market data, such as price volume moments. In technical analysis, the businessmen and other
analysts use various statistical tools to examine the price moments and based on these data they
try to predict the future price movement. Some of these technical analyses tool and their
importance in analyzing finance department is given below:
Mean: The mean defines the expected return or average expected return on investment which is
expected to generate over a specific amount of time. The importance of mean value can be
understood from the fact that using this the investors could estimate the average gains or loss
made9. It is calculated using the formula:
Mean=∑ of observation ÷ Number of observation
The following screenshot represents the mean value of each of the index for the stock of Apple
company.
9
"Arithmetic Mean Vs Geometric Mean," Arithmetic Mean Vs Geometric Mean, 2024, accessed 08, 2024,
https://www.cuemath.com/data/arithmetic-mean-vs-geometric-mean/
Geometric Mean: The geometric mean is used for calculating the average compound annual
growth over a period10. In order to understand the compounding effects of an investment the
investor uses the geometric mean. It is very important to as it helps us to evaluate investment
returns over multiple years11. The geometric mean calculated for this case study is shown below.
Standard Deviation: Now in a very large amount of dataset, as in this case the dataset of Apple
company’s stock and that too represents daily stock values. It is important to understand the
spread of data. For this purpose, the standard deviation is used. A greater value standard
deviation indicates that there is a greater amount of risk involved in such investment 12. The
standard deviation for this given case study is shown below.
Beta: As an indicator the Beta factor is used to measure the asset’s sensitivity to the market
movements. In order to calculate the beta factor, the company’s return values are compared with
the values of the S&P 500. The value of beta factor is interpreted as13:
Beta=1: It indicates that the asset moves in line with the market.
Beta>1: It shows that the assets is more volatile as compare to market.
Beta<1: The asset is less volatile as compared with the market value.
10
"Geometric Mean," Geometric Mean, 2024, accessed 08, 2024, https://byjus.com/maths/geometric-mean/.
11
Cuemath, "Arithmetic Mean Vs Geometric Mean."
12
"Beta vs. Standard Deviation," 2024, accessed 08, 2024, https://thisvsthat.io/beta-vs-standard-
deviation#:~:text=A%20beta%20of%201%20means%20the%20investment%20moves,of%20the%20volatility%20or
%20riskiness%20of%20an%20investment.
13
"Beta: Definition, Calculation, and Explanation for Investors," Investopedia, 2024, accessed 08, 2024,
https://www.investopedia.com/terms/b/beta.asp.
For this case study the Beta value was calculated using three different methods like using the
regression analysis tool, slope method and using the variance and covariance functions. The
result shows that the Beta value is less than 1, thus it is less volatile14.
CAPM Beta: CAPM stands for capital asset pricing model and it is also known as levered beta
or equity beta. It is a measurement that it used to compare the volatility of returns of a company’s
stock against those of the broader market. The difference it poses against the Beta value is that it
accounts the risk which is involved in the market. The highlighted data shows that the value of
CAPM Beta and it is less than 115. Thus, it shows that it less volatile.
3. Investment Current Performance
The term investment performance in the field of finance shows the level of growth an investment
experiences over a specific time period. This is often expressed in terms of percentages in the
investment’s values. The following screenshot shows the investment performance for the Apple
company.
14
Editor, "Beta vs. Standard Deviation."
15
Kenton, "Beta: Definition, Calculation, and Explanation for Investors."
4. Conclusion & Recommendation
Investing in a business is a difficult task that requires efforts and dedication. Without
understanding the market, it is difficult to get proper profit from the market. There are some
recommendations that must be followed to get a higher value of return on investment.
Firstly, it is very important to set clear investment goals before investing. Also, the goals should
be based on realistic data and that could be done by considering the savings, regular income and
other factors. The research data shows that investment based on longer timeframes have better
profit due to better visibility of data.
As it is being normally said in the world of markets and investments that the return on
investments are subjected to market risk, and it is advisable to read the policy documents of the
company first before doing any adventure of investment. Thus, assessing market fluctuations is
very important, some stocks are volatile in nature and investing in them would not be beneficial
for the investor. As in the case of Apple company, the data shows that Adjusted closing value for
the company during covid pandemic significantly decreased. So, investing in stocks that are risk
tolerant is very important. Another thing which will be very advantageous is to be informed
about the markets, for this purpose seeking professional advice will also be helpful.
In conclusion it can be said that the calculated data showed the Apple is less volatile as compared
with the datasets of S&P 500. Thus, it would be very advantageous to invest in such a company.
5. Reflective Statement
Life is all about all learning, as this was a group task thus due to which I understood about the
importance of learning from each other. At the begging of this task, I had some difficulties
regarding the different concepts of this course but fortunately most of my group members taught
me about these concepts. Also, as through this we learnt about different concepts of market and
its analysis these experiences will be very helpful for us in our future.
