A Study on Gauging the Risk &Return of Selected Stocks in the Automobile Sector

The stock market holds substantial significance in the economy, serving as a crucial source of capital for companies. This financial platform not only facilitates companies in raising funds for various purposes like expansion, innovation, and operational needs through the issuance and trading of shares but also plays a pivotal role in influencing diverse sectors. In particular, the automobile sector stands out as a key player in the stock market, attracting a diverse array of investors. Leveraging the consistent growth of the GDP and robust domestic demand for commercial vehicles, the sector presents alluring investment opportunities. With a desire to maximise return on investment, many individuals are inclined towards investing their money in the stock market. Before making investments, investors should conduct a comprehensive analysis of the stock market and then proceed to make investment decisions. The primary goal for every investor is to manage risk effectively while enhancing their return on investment. This study aims to analyze the risk and return associated with the stocks of selected automobile companies, utilizing secondary data. The present study focused on collecting monthly data on the chosen automobile stocks over the last five years, from 2018 to 2023. Monthly returns for the stocks were computed, leading to the derivation of average returns, standard deviations, and correlation. The study progressed to assess risk by employing beta and regression analysis on formed indices, which were then compared to the NIFTY 50. The study’s findings revealed the intricate dynamics of risk and return among the specified automobile companies' stocks, providing valuable financial insights for potential investors in the automobile sector. Keywords: Risk, Return, Automobile sector, Regression Analysis