WEBVTT

00:00.660 --> 00:04.190
Welcome to the second section on financial portfolios.

00:04.260 --> 00:10.860
And given the U.S. name Modern Portfolio Theory an asset pricing one could expect a rather theoretical

00:10.860 --> 00:11.940
section here.

00:12.030 --> 00:18.000
But the main focus is still on working with financial data and coding and pandas and therefore we will

00:18.000 --> 00:25.670
derive for the most fundamental finance theories and models in a unique and very intuitive way.

00:25.920 --> 00:30.450
And therefore we do not extensively use formulas.

00:30.460 --> 00:38.310
And we also do not mathematically derive or explain Modern Portfolio Theory or asset pricing models

00:38.310 --> 00:40.050
like the cap and model.

00:40.890 --> 00:46.890
And typically when working with models that simplify reality you want us to make a restrictive model

00:46.890 --> 00:47.890
assumptions.

00:48.120 --> 00:50.970
And that's exactly what we will avoid here.

00:51.300 --> 00:53.940
So no strange assumptions.

00:53.940 --> 00:58.020
And finally we will also not try to predict the future.

00:58.230 --> 01:00.160
So what will we do in this section.

01:00.180 --> 01:05.180
And actually we only analyze historical data for our small subset.

01:05.220 --> 01:12.690
So we have our six stocks and with the historical data for our six stocks we try to find patterns and

01:12.690 --> 01:19.590
relationships and the historical data and with this approach we actually get the most easy and practical

01:19.590 --> 01:25.020
intuition or understanding on concepts like risk diversification.

01:25.020 --> 01:29.460
So there is a difference between systematic risk and and systematic risk.

01:29.580 --> 01:34.300
Then we intuitively understand the Capital Asset Pricing Model or shop cap m.

01:34.500 --> 01:43.290
And finally we will also calculate the better effect of a stock and also the alpha so that's the plan

01:43.290 --> 01:44.330
for the next videos.

01:44.340 --> 01:46.200
And I hope to see you there by.