Correlation, Uncertainty and Investment Decisions

Raj S. Dhankar ()
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Raj S. Dhankar: University of Delhi

Chapter Chapter 11 in Risk-Return Relationship and Portfolio Management, 2019, pp 179-195 from Springer

Abstract: Abstract Capital market efficiencyMarket efficiency is a matter of great interest for policymakers and investors in designing investment strategy. If efficient market hypothesisEfficient Market Hypothesis (EMH) (EMH) holds true, it will prevent the investors to realize extra return by utilizing the inherent information of stocks. They will realize extra returns only by incorporating the extra risky stocks in their portfolios. While empirical tests of EMHEfficient Market Hypothesis (EMH) and riskRisk –return relationship are plentiful for developed stock markets, the focus on emerging stock markets like India, Pakistan, Sri Lanka, etc., began with the liberalization of financial systems in these markets. With globalization and deregulation, the enormous opportunities of investment in South Asian stock markets have attracted the domestic and foreign institutional investors in general, and to reduce their portfolioPortfolio riskRisk by diversifying their funds across the markets in particular.

Date: 2019
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DOI: 10.1007/978-81-322-3950-5_11

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