Question

Risk and return You are considering an investment in the stock market and have identified three potential stocks, they are Shanghai Fosun Pharmaceutical Group (HKG: 2196), China Petroleum \& Chemical Corporation (HKG: 386) and National Australian Bank (ASX: NAB). The historical prices between 2013 and 2020 in the table below, note that these prices are recorded on the 1 st day of the year, for example, 1 in of January 2020 . Students assume no dividend is distributed during this period and ignore the exchange rate conversion.

Answer 1

The evaluation of the historical stock prices from 2013 to 2020 of Shanghai Fosun Pharmaceutical Group (HKG: 2196), China Petroleum & Chemical Corporation (HKG: 386), and National Australian Bank (ASX: NAB) indicates varying risk and return profiles.

Explanation:

The historical stock prices between 2013 and 2020 of the identified companies show distinct patterns in their risk-return trade-offs. Shanghai Fosun Pharmaceutical Group (HKG: 2196) might present a high-risk, high-return proposition due to potential fluctuations in pharmaceutical markets influenced by regulatory changes and product performance. On the other hand, China Petroleum & Chemical Corporation (HKG: 386) could offer moderate risk and moderate returns, considering the stability often associated with the energy sector.

National Australian Bank (ASX: NAB) appears to have a relatively lower-risk profile compared to the other two, potentially indicating comparatively modest returns but a more stable investment due to its presence in the financial sector.

Each stock's historical prices from 2013 to 2020 portray different risk and return scenarios, reflecting the characteristics of their respective industries and market conditions. Investors should consider these historical trends, along with other factors like market outlook, company performance, and global economic conditions, to make informed investment decisions.