Turkish Journal of Computer and Mathematics Education Vol.10 No.

03 (2019), 876-882
Research Article

A STUDY ON RISK AND RETURN ANALYSIS WITH REFERENCE TO

GOLD AND SILVER

G.SONY, G.SRINATH
Sree Dattha Institute of Engineering and Science Hyderabad Telangana

ABSTRACT
This study primarily looks at the correlation amongst Gold and Silver for specific periods it
incorporates, toward the beginning of the periods, the endeavored cornering of the Silver and
Gold market as it were. The prime truth is that one would not assume to essentially observe a
steady connection among Gold and Silver. Gold and Silver have in the past been viewed as a
substitute for each other, both being valuable metals. There is an important affirmation that these
valuable metals can play a helpful nature in broadening hazard, in addition, to be an alluring
interest in their individual right, this one may anticipate the costs split comparative dynamic. The
apparatuses utilized are connection covariance. The study will assist investors in knowing the
correlation and investors who will put resources into Gold or Silver.
Keywords Commodity market, silver, and gold.

RISK
Risk refers to the changeability in returns from security. Fundamentally, the investors
concentrate a more actual outcome which is not exactly the expected outcome. In the event that
the scope of potential outcome is wide, at that point the risk will likewise be high.
RETURN
Return is a standout amongst the most vital motivating elements which empower investment.
Return is the top-notch given to the investor for making an investment. To decide the execution
of an investment manager, it is basic to figure the historical returns. These returns are
additionally regularly utilized as a key contributor for forecasting the returns later on.
Investment is the responsibility of assets in a benefit or monetary instruments with the point of
creating future returns as premium or profit. An investor has various investment alternatives to
lean toward from, contingent upon his risk and desire for returns. Distinctive investment
alternatives speak to an alternate risk-reward trade-off. Generally, safe investments are those that
offer guaranteed, yet lower returns, while high- risk investments give the likelihood to gain more
noteworthy returns.
SCOPE
1. The present study is centered on analyzing the risk-return on
investment in Gold and Silver market.
2. Examining the commodity price movements in the market.
3. Helpful for investors for decision making.

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Research Article

OBJECTIVES
1. To study and analyze the commodity market of selected valuable metals i.e., Gold and
Silver.
2. To study the price volatility among commodity market of selected valuable metals i.e.,
Gold and Silver.
3. To study the risk and return on Gold and Silver.
HYPOTHESIS
H0- There is no significant relation between bullion commodities risk & return and market risk
& return.
H1- There is a significant relation between bullion commodities risk & return and market risk &
return.
RESEARCH METHODOLOGY
The source of data can be collected from Primary data and Secondary data. Primary data is that
data which are collected by and by through the review with the questionnaire and by the
observation strategy, however, in my project, everything is finished with the historical values
which have as of now there in websites. So, my data collection is from secondary data.
Secondary data: Data is collected from different sources

• Textbooks
• Journals
• Websites,
• Newspapers...etc.
Period of the study
The period of the present study is consisting of one month ranging from 1st jan.2014 to 31st
Jan.2015.
SAMPLING:
Sample area: In commodities, I have picked non-agro commodities i.e. Gold and Silver
VII. REVIEW OF LITERATURE
Dr. Shefali Dani and Riddhi Ambavale, in their study, found that Gold and Silver are the most
mainstream metals in India. Investors do invest in Gold and Silver with their other investment
options like stocks, mutual funds, real estate property. The research is that before the year 2006,
investors consistently influence investment in Gold and Silver however they to lessen their
investment in such metals as the price of Gold and Silverare at hike peak for the back 2007, and
they have picked other choice from the investment. In Silver, coins of Silver are most prevalent
among the investors. Structure their investigation of the investors' preference on investment
onGold and Silver by conduction research about through the questionnaire, we can to realize that
investors are investing in Gold and Silver rely upon their income and savings with them.
Draper, faff et. Al. (2002) “Do Precious Metals Shine? An Investment Perspective”. Portfolios
that contained Gold, Silver, or platinum perform altogether superior to a standard equity
portfolio. Along these

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Research Article

lines, sharp investors can limit hazard while maximizing returns.

Dr. G. Malyadri and B. Sufheer Kumar (2012) “A StudyonCommodity Market” recalls that
commodity derivatives touched base in Indian as mid-1875, scarcely about 10 years after they
arrived in Chicago. The commodity market in India has encountered an exceptional boom as far
as the numbers of modern exchange, the number of commodities allowed for derivative trading
just as the issues to be made due with continued development of the market.
Jaffe (1989)while Gold is very risky as an individual asset; its profits are commonly autonomous
of those on different assets. This proposes Gold can assume an important role in a diversified
portfolio. 'Particularly in recession and financial crisis, expanding Gold investment to a larger
amount can diminish account volatility and secure one's financial future over the long run.
Sherma, f. (1983) “AGoldPricing Model” in his study presented that Gold markets carried on
productively new data is immediately incorporated into the price. Under molding of
vulnerability, numerous investors swing to Gold since it is a "currency without borders – a
profoundly liquid and secure asset that can be accessible at any time. In the midst of economic
distress, most asset classes will in the general move in a similar direction. Gold is correlated to
numerous assets, including equities and bonds. The economic forces that decide the price of

Gold are against the powers that decide other financial assets. Subsequently, Gold assumes an
essential job as a diversifies, going about as a balancing out impact for investment portfolios.
Along these lines, a portfolio blend of equities with Gold would result in a portfolio of assets
moving independently, with low correlation
VIII. STATISTICAL TOOLS
In this study, the accompanying statistical tools are utilized to evaluate the performance of the
Gold and Silver.
1) Mean
2) Standard Deviation
3) Correlation and covariance
4) Variance
5) Beta
6) Bar diagram
DATA ANALYSIS AND INTERPRETATION MEAN

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Research Article

Interpretation: From the above table the average return of all variables are negative
values. The least negative value observed in MCX and Sensex with -0.22399 and - 0.23275
compared to gold and silver with - 0.63239 and -49.42308 respectively.
VARIANCE

Interpretation: From the above table, 1.42247 is the highest stated variance of MCX and
0.0385137 is the lowest variance of commodity gold.
STANDARD DEVIATION

Interpretation: From the above table, mcx and sensex both stands highest in standard deviation
value i.e. 1.1926735 and gold is the lowest raised standard deviation value i.e. 0.1962491.
Calculation of Beta

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Research Article

The Beta value arose for the analysis of both variables gold and silver is 0.67190
CALCULATION OF CORRELATION AND COVARIANCE

Interpretation: The above table depicts that there is a relationship between gold and silver with
market returns (sensex and mcx). Sensex and silver are positively correlated and sensex and gold
are also positively correlated. It shows that silver, gold, and sensex are moving in the same
direction and vice-versa. Gold and silver are in the same direction.
HYPOTHESIS TEST
T-Test: Paired Two Samples for Means

T-test value -0.908 which is lower than the t critical value i.e. 2073873068.so, we failed to reject
H0. Hence there is no significant relationship among gold and market returns.
T-Test: Paired Two Samples for Means

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t-test value of silver is 0.523 which is lower when compared to critical value with 2. 073873. So,
we are failed to reject H0, Here, there is none relation among silver and market returns.

FINDINGS
1. Silver and mcx returns are low when compared to gold and mcx returns.
2. The Standard deviation of gold is lower when compared to both the standard deviation of
mcx and sensex.it refers to the total risk of mcx is the highest
3. Silver variance is highest when compared to gold variance.
4. Gold and silver, sensex and silver, sensex and gold are correlated positively and other,
both combinations are negatively correlated.
5. Silver and gold are opposite to mcx and gold moves opposite and silver moves in an
identical direction.
CONCLUSION
To assess the data, correlation, beta, standard deviation, mean is utilized. Gold and Silver have
low price development contrast with Sensex and MCX. Silver moves same way with Sensex
files. Gold and Silver are positively correlated and covariance. Gold and MCX, silver and MCX
have adversely corresponded. It shows Gold and Silver move inverse to MCX. An Investor can
invest in Gold and Silver when MCX has falling view.
REFERENCES
1. www.bseindia.com
2. www.etmarkets.com
3. www.mcxindia.com

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4. www.yahoofinance.com
5. Prasanna Chandra- Investment analysis and portfolio management
6. Kevin-SAPM

7. A. Ramesh & C. Sneha-Risk return analysis with reference to gold and

silver

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