Question: Statistics for three stocks, A, B and C, are shown in the following tables: Standard Deviation of Returns Stock A B C Standard Deviation (%)

Statistics for three stocks, A, B and C, are shown in the following tables:

Standard Deviation of Returns
Stock	A	B	C
Standard Deviation (%)	40	20	40

Correlations of Returns
Stock	A	B	C
A B C	1 0 0	0.90 1 0	0.50 0.10 1.00

Only on the basis of the information provided in the tables, and given a choice between a portfolio made up of equal amounts of stocks A and B or a portfolio made up of equal amounts of stocks B and C, which portfolio would you recommend? Show calculations and Justify your choice.

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