RISK AND RETURN ANALYSIS OF MANUFACTURING COMPANIES IN NEPAL

Abstract

This study presents a comprehensive analysis of the risk and return characteristics of two prominent manufacturing companies in Nepal: Unilever Nepal Limited (UNL) and Himalayan Distillery Limited (HDL). Utilizing financial data spanning multiple years, including stock prices, dividends, and NEPSE index values, the research examines various financial metrics to assess the risk and return profiles of UNL and HDL within the context of the Nepalese manufacturing sector. Through quantitative analysis, the study aims to provide valuable insights for investors seeking to optimize their investment strategies in this dynamic market environment. The findings reveal distinct differences in the risk profiles of UNL and HDL, with UNL demonstrating lower volatility and systematic risk compared to HDL. This disparity underscores the importance of considering risk factors in investment decisions and highlights the potential benefits of diversification within the Nepalese manufacturing sector. Furthermore, the study identifies HDL as offering higher average returns, indicating potential opportunities for investors willing to tolerate greater risk. The observed pricing disparities between UNL and HDL underscore the complexities of asset pricing mechanisms and market sentiment within the Nepalese manufacturing sector. Keywords: (risk and return, systematic risk, unsystematic risk, beta coefficient, expected return, covariance)