You are working in an investment company in the U.K. and your client ask you to make a report of the UK financial market analysis before and during COVID19 pandemic. Specifically, the client worries about external impacts as the UK financial market is the highly internationalised financial market. Especially, the client wants to have a better understanding of UK stock market behaviour that might be altered by the impact of pandemic. You are specifically required to analyse following points.
A) Market Integration and co-movement: (30%): using various methods such as integration measure, correlation and regression analysis. • What is the integration level between three countries? • Co-movement between three countries’ market index and industries? B) Stock market in the UK (40%): using various methods such as standard deviation,
correlation, and regression analysis.
• Co-movement between sectors or industries in the UK (any unusual outcomes).
• Measuring risks and interpreting its patterns for the selected countries and three sectors of the UK.
• Any co-movement of observed risks between the countries (UK-US & UK-YC).
• Spillover effect of risks from the selected countries to the sectors of the UK.
C) Conclusions and Suggestions for investment (30%)*:
• Brief summary of main findings with theoretical explanations
• Suggestions based on the main findings
Note 1: It requires to choose three industries/sectors of the UK. For each sector/industry, you need to select three companies to create the average return of the industry.
Note 2: It requires to analyse three international markets. The UK is the main country and the US market is the most influential market. The last country you need to choose (hereafter Y.C.) with the rational reason of your selection and do not choose your home country. The analysis, therefore, should be based on the behavioural patterns of the three markets such as the UK, the US and Y.C and selected three sectors
Note 3: Data set should be between 2018 and 2020. It requires to investigate before and during the pandemic.
Note 4: main outcomes of all calculations in excel form should be attached in appendix. Do not copy and paste the excel outcome in the analysis section but you require to make a table for the analysis.
Note 5: * this weight is not for the marking. It represents the importance of the section such as size and difficulty level of analysis. Marking is following the rubric attached at the end of this document.
Please see next page
The assignment writing should follow the structure and contents provided.
1) Introduction: very brief introductory paragraph. The introduction should address:
• Main purpose of the report
• Summary of countries and data
2) Main sections: you need to investigate for Three periods such as period 1 (2018-2020), period 2 (between 2018-2019) and period 3 (2020).
• (A) Market Integration and Co-movement: analyse for three periods
1) Calculate the degree of integration between UK & US and UK & Y.C.
Interpretation of main findings.
2) Calculate co-movement between three sectors of the UK and US market and Y.C. market. Interpretation of the main findings
• (B) Risks and spillover effects: analyse for three periods
1) You need to select at least three sectors (industries) in the UK that might not be correlated each other. For each sector (industry), you need to choose three companies (sector average will be the average of three companies). Investigate the impact of US market return and Y.C market return and UK market return on returns of selected three sectors of UK market. It requires to run the
2) Calculate risks (volatility) for three countries: UK: FTSE100, US: S&P500, and index of your country). Also, the risk of three sectors in the UK.
Investigate co-movement of risks between market indices and three sectors.
What is the Impact of market risks on risk level of three sectors?
The last question is required to run regression analysis.
3) Finally, spillover effects of that risk? (requires regression analysis). Any
spillover effect from S&P500 to each sector in the UK? Any spillover effect from
Y.C. index to each sector in the UK?
• (C) Conclusions and Suggestions for the Investors:
It requires to summarise main findings. Based on the main findings, make
suggestions. Also please make a link to the literature or theories (Please try
to answer following questions). Are your findings in line with main findings in the literature? Can you explain the main findings with theoretical frameworks?
Type of service: Academic paper writing
Type of assignment: Report
Number of sources: 6
Academic level: Undergraduate
Paper format: Harvard
Line spacing: Double
Language style: UK English