WEBVTT

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Welcome to coding exercise 50 and are the tuba that s part and our exercises file is still on the desktop

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and we have free finance data exercises and to be on par to financial data analysis and now let's hope

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exercise 15

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and exercise 15 is all about creating analyzing and optimizing financial portfolios.

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So first of all you have to import the stocks dataset and select the five year period here.

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Then you should create 10000 random portfolios and the weights of the constituents of course have to

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sum up to one and all weights must be between 0 and 1 and you should actually use the NPD at random

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seed of 1 to 3 to get actually the very same results as I do in the solution.

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And then you should calculate annualized the risk and return for the six stocks and also for the 10000

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random portfolios and the calculation shall be based on daily returns simple returns and you should

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also visualize this here and to make life easier.

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You can also use the user defined function annualized risk and return.

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And then you should assume that the approximate risk free assets showed a return of one point seven

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percent.

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So this could be a five year U.S. Treasury note.

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And with this you can calculate the Sharpe ratio for the six stocks and for the 10000 random portfolios

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and you should also visualize this sharp ratio as the third dimension of the graph with different colors.

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And then you should also search for the max Sharpe rates for portfolio from the set of the 10000 random

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portfolios and determine risk return and Sharpe ratio and then finally you have to determine the weights

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for the constituents in the max to operate your portfolio.

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And if you are computing power allows for this you can also increase the number of random portfolios

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to for example 50000.

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And by doing so your results are getting more exact on more reliable.

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And then you might be able to answer the question of which stocks do you think have an actual rate of

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zero in the real Max operator portfolio.

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That can be derived with an optimization algorithm and it should also be able to identify highly concentrated

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position in one of the stocks.

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And of course you can also use the option to guided and instructed.

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And finally there's also some hints here at the very end so that's accounting exercise safety and I

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hope you have fun and feel free to have a look at the solution by.