Diversification and Portfolio Performance of the Pharmaceutical Sector of Bangladesh

Abstract

The pharmaceutical industry is one of the thrust sectors of the economy of Bangladesh. Here, in this report I evaluate how individual players or the companies under review for this report namely Beximco Pharmaceuticals, Ambee Pharmaceuticals, Square Pharmaceuticals and Renata Pharmaceuticals are performing individually and the impact on their portfolio performance when they combine to form a portfolio. While doing this I also evaluate whether the effects of diversification hold for this sector. To evaluate portfolio performance, I used common measures such as Sharpe ratio and M-Squared. To perform all these, I had to calculate the standard deviation and returns of the individual assets over a four year period, along with calculating the covariances between their returns. Based on these calculations, I estimated the standard deviation and returns of the portfolio constructed. To check the effects of diversification and to calculate the ratios these data were used.