(e) Based on your results in (a) to (d) and anyfurther analysis you choose to do, compare and comment on the country risk return patterns, the relative performancesand correlations across the...

Relative country risk and return patterns
Statistical estimation is a powerful tool that can provide valuable insight for stock risk
and return analysis. Here we compared the returns from three stock markets in different

countries for comparison of risk vs. returns.
The average and geometric returns were not very high for Malaysia and Singapore,
while they were negative for Australia. Singapore has an even lower geometric return
on its stocks. Standard deviation is a measure of historical volatility of a stock. The
annualized standard deviation is highest for Singapore. Investors prefer to take into
account annualized returns in place of simple average returns because they assess the
volatility measurement as well.
Mathematically, variance represents the deviation of a data point from the mean value
of the set. In investment analysis, variance represents volatility and thus is a measure of
risk associated with an investment. Singapore also has the highest variance among the
three countries being analyzed, while Malaysia has the lowest.
The results as reflected in covariance matrix show that all three indices move in the
same direction as all numbers are positive. The degree of movement cannot be judged
by covariance and it is not a directly comparable metric. A more normalized metric
called correlation overcomes these limitations. We can see that correlation between
Australian and Singapore indices is the highest, followed by correlation between
Singapore and Malaysian indices. The lowest in this group is seen between Malaysia
and Australia. The correlation values do not remain constant because they tend to
change with the level of integration of markets or economy (Stuart Hyde).
Events affecting market performance
Stock markets are a reflection of investors‟ expectations of future earning potential of
firms. As a consequence of global economic slowdown, the investors‟ expectations of
returns have also been rationalized (Crabb, Martin 2013). Malaysia is perceived as a
safe investment destination by investors. It could be out of economic growth that the
country showed despite global economic turmoil (Daniel Khoo 2012). Singapore is seen
as a stable economy with stable...