This is a presentation on portfolio and risk analysis.

1. STOCK MARKET
The term stock market refers to several exchanges in
which shares of publicly held companies are bought
and sold. Such financial activities are conducted
through formal exchanges and via over-the-counter
(OTC) marketplaces that operate under a defined set of
regulations.

3. INTRODUCTION
PORTFOLIO:
A portfolio is a collection of different financial assets like stocks, bonds,
commodities, cash, real estate, etc. Any investor can hold a portfolio like
an individual, corporation or financial institution. Investors put their
money in these assets to generate revenue while ensuring that original
capital does not erode.
PORTFOLIO RISK:
Risk reflects the overall risk for a portfolio of investments. It is the
combined risk of each individual investment within a portfolio. The
different components of a portfolio and their weightings contribute to
the extent to which the portfolio is exposed to various risks.
The major risks a portfolio will face are market and other systemic risks.
These risks need to be managed to ensure a portfolio meets its
objective.

4. TYPES OF PORTFOLIO RISK
1. Market Risk:
This is also known as systematic risk or the risk that an investment will
decline in value due to macroeconomic factors that affect the entire market.
These factors include interest rate changes, inflation, geopolitical events,
and economic recessions.
2. Credit Risk:
This risk involves an investment that will decline in value due to a default by
the issuer of a bond or other debt instrument. This is most prevalent in
corporate bonds.
3. Liquidity Risk:
This risk involves an investment that cannot be sold or liquidated quickly
enough to avoid losses. Usually, it can occur when there is a lack of buyers
in the market

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4. Inflation Risk:
This risk pertains to the purchasing power of an investment that will decline due
to increases in the general price level of goods and services.
5. Intrest Rate Risk:
The risk involves the value of an investment that will decline due to changes in
interest rates.
6. Currency Risk:
The risk refers to the value of an investment denominated in a foreign currency
that will decline due to changes in exchange rates.
7. Reinvestment Risk:
This risk may come in the form of future cash flows from an investment that will
be reinvested at a lower rate of return.

6. Measures Of Portfolio Risk
1. Standard Risk:
Standard deviation is a measure of the dispersion of returns
around the mean of a portfolio. It is a widely used measure
of portfolio risk and represents the volatility of the
portfolio.
2. Beta:
Beta measures the sensitivity of an investment’s returns to
changes in the overall market.
3. Value at Risk (VaR)
VaR is a statistical measure of the maximum potential loss
that a portfolio may experience over a given time period
with a certain level of confidence.

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4. Conditional Valueat Risk (CVaR):
CVaR, also known as expected shortfall, is a risk measure that looks at
the expected loss beyond a certain threshold.
5. Sharpe Ratio:
Sharpe ratio is a risk-adjusted measure of portfolio performance. It
measures a portfolio’s excess return over the risk-free rate relative to
its volatility.
6. Sortino Ratio:
The Sortino ratio is a risk-adjusted measure of portfolio performance
that takes into account the downside risk.
It measures the excess return of a portfolio over the minimum
acceptable return,
7. Drawndown:
A drawdown is a measure of the decline in the value of a portfolio
from its peak value to its lowest point.

8. PORTFOLIO RISK MANAGEMENT STRATEGY
1. DIVERSIFICATION:
Diversification is a strategy that involves investing in a variety of assets to
reduce the overall risk of the portfolio. The idea behind diversification is that
not all assets will perform poorly at the same time, so losses in one asset can
be offset by gains in another asset.
2. ASSET ALLOCATION:
Asset allocation is a strategy that involves dividing a portfolio among
different asset classes, such as stocks, bonds, and cash. The goal of asset
allocation is to create a portfolio that is consistent with the investor’s risk
tolerance and investment goals.

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3. HEDGING:
Hedging is a strategy that involves using financial instruments, such as options or
futures contracts, to offset the risk of a portfolio.
4. Portfolio Optimisation:
Portfolio optimization is a strategy that involves selecting the optimal mix of
assets to maximize the expected return of a portfolio while minimizing the risk.
5. Risk Budgeting:
budgeting is a strategy that involves allocating risk across different investment
strategies or asset classes. The goal of risk budgeting is to create a portfolio that
is consistent with the investor’s risk tolerance and investment goals.

10. PORTFOLIO RISK ASSESSMENT
TOOLS
1. Portfolio Management Software:
Portfolio management software is a tool that allows
investors to monitor and analyze their investment
portfolios. This software can provide real-time data
on portfolio performance, risk metrics, and asset
allocation.
2. Risk Management Software:
Risk management software is a tool that allows
investors to identify and manage risks associated with
their investment portfolio. This software can provide
a comprehensive analysis of the portfolio’s risk
exposure and suggest risk management strategies.

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3. Risk Management Consultant:
Risk management consultants are professionals who
specialize in identifying and managing risks associated
with investments. They can provide a comprehensive
analysis of an investment portfolio’s risk exposure and
suggest risk management strategies.
4. Financial Data Provider:
Financial data providers, such as Bloomberg or Thomson
Reuters, provide real-time data on market conditions,
stock prices, and economic indicators. These data
providers can be useful for investors who want to stay
informed about the latest market developments.

12. CONCLUSION
Diversify your portfolio across various asset
classes
Understanding and managing portfolio risk is perhaps
the most important role within portfolio management.
Asset allocation decisions will have the greatest impact
on the risk a portfolio will face. Being able to quantify
the risk of a portfolio allows investors to optimize
potential returns. The more risk can be quantified and
managed, the more capital can be allocated to riskier
assets that generate the highest returns.