WEBVTT 00:00.970 --> 00:07.210 In this video I will give you some guidance on hints on how to tackle the final project and the general 00:07.210 --> 00:12.760 assumption and requirements are that you have successfully mastered the content of part 1 and Part 2 00:13.030 --> 00:19.090 as you will be asked here to apply and combine most of the things that you have learned before. 00:19.090 --> 00:24.790 So you should have some Solid Panda's coding skirts now and also some background knowledge and finance 00:24.790 --> 00:30.910 and investments that are actually the hard skills required in this case study but similar to the real 00:30.910 --> 00:37.570 world it's only 50 percent of the deal and the other 50 percent are good judgment and that you can apply 00:37.570 --> 00:40.660 your hard skirts to different cases. 00:40.660 --> 00:42.600 So let's go to our case here. 00:43.620 --> 00:49.770 And it's actually our first day as the financial advisor in a company that manages the portfolios of 00:49.770 --> 00:51.720 high net worth individuals. 00:51.780 --> 00:52.860 So that's wealth. 00:52.890 --> 01:00.150 The private persons and your first task is to optimize the portfolio of Mary Johnson an independent 01:00.150 --> 01:06.040 physician who recently retired so far Mary's strategy was pretty simple. 01:06.050 --> 01:12.560 She holds the five highest valued stocks in the healthcare sector and that approach is obviously not 01:12.560 --> 01:18.980 really in line with modern portfolio theory and your task is to convince her that it might be better 01:18.980 --> 01:23.210 to diversify her stock portfolio and that some other stocks and sectors 01:26.480 --> 01:32.450 but first of all you have to analyze the past performance of our portfolio and as a very first step 01:32.480 --> 01:39.080 you need to get to the stock tickers of the five highest valued healthcare stocks and you can certainly 01:39.080 --> 01:42.050 find them in the listings data set. 01:42.170 --> 01:46.610 Then next thing you need to rebuild and analyze a strategy for the past 22 years. 01:46.610 --> 01:47.290 Period. 01:47.360 --> 01:53.870 By creating an appropriate index and you might gather the data from Yahoo Finance then as a next step 01:53.870 --> 01:56.210 you are asked to verify her statement. 01:56.240 --> 01:59.390 So for investment periods of six years or longer. 01:59.540 --> 02:02.000 I never lost money with my portfolio. 02:02.000 --> 02:09.090 Is she right next you need to analyze and compare the performance of her large cap or health care portfolio 02:09.480 --> 02:15.750 with other sectors for the most recent four year period and you should also create an index of price 02:15.750 --> 02:16.420 chart. 02:16.430 --> 02:17.370 Then step 5. 02:17.370 --> 02:24.300 You need to calculate and compare annualized risk and return and also the sharp ratio and then step 02:24.300 --> 02:24.610 6. 02:24.600 --> 02:26.910 This is the most critical part here. 02:26.910 --> 02:33.630 So here you have to educate marry that holding in diversified portfolio is beneficial as you can diversify 02:33.660 --> 02:35.280 and systematic risk. 02:35.310 --> 02:39.910 And here it might be best to assimilate many random portfolios. 02:39.910 --> 02:42.120 And finally and step seven. 02:42.120 --> 02:48.830 You need to identify those sectors to add to marriage portfolio that fits and to have revisited strategy 02:49.290 --> 02:52.790 so a sectors most recent that far should be positive. 02:53.190 --> 02:55.950 And the beta should be below 1. 02:55.980 --> 03:02.820 So marry a favor see a defensive stocks and sectors and you can get some more guidance here. 03:02.820 --> 03:08.520 So here are some code fragments. 03:08.640 --> 03:10.860 So for example for plotting 03:14.500 --> 03:17.570 so that's the final project and I hope you have fun with it. 03:17.770 --> 03:24.100 And if you have some difficulties you can also have a look at these solutions notebook or these solutions 03:24.100 --> 03:24.580 video. 03:24.850 --> 03:26.520 So have fun and take care.