Assessing risk and return

You are required to recommend a two-asset portfolio from the following four assets, assuming equal investment in each asset that will minimise risk.

ASX Code Name

JBH JB-HI-FI Limited

QAU GOLD ETF

CTX Caltex Australia

AORD All Ordinary index (MKT)

Step 1: As a group, research the nature of the assets on the internet. Using this information, come to an agreement on which combination of two assets you would recommend pose the least risk if invested in equally. It is important for this part of the assignment that you do not do any calculations because the nature of each business should provide you some intuition about the gain and riskiness of the business.

Provide a statement explaining:

a) Which two assets should be chosen and why.b) How the team came to an agreement, highlighting any opposing viewpoints that were raised by team members and how as a group you came to agree on the two assets you have recommended.

Step 2: Download the data files from the unit site, under the Assessment folder. Amongst your group members, assign each member of your group 1 or 2 combinations* of assets. Each member is to calculate the portfolio risk for the combinations assigned.Once all of the possible combinations have been calculated, as a group determine which combination you would recommend to minimise the portfolio risk, calculate the return for that combination and explain the steps taken to make that recommendation (including calculation steps).

To calculate portfolio risk data are provided in the online excel sheet link provided below:

https://docs.google.com/spreadsheets/d/1BM9Eawufz-TlAyzaqUKG7pWRNab4vQzyF9yWpQoD9jU/edit?usp=sharing