Two tasks. The tasks require strong excel skills combined with Finance knowledge and analysis.
Task 1
Please search for the events regarding the GameStop short squeeze that happened recently. For example, the link here: https://en.wikipedia.org/wiki/GameStop_short_squeeze.
discuss how derivatives play a part in the actions. Please explain.
1 What is short squeeze?
2 How derivatives are involved with short squeeze?
3 How do you as a fund manager reduce risks regarding short squeeze whether you are not long or short the stocks?
Task 2
1 Select one company stock that you would like to analyze. You need to know the name of the company or the ticker of the company. Search the company from yahoo finance. Please download the data from Yahoo Finance at here: https://finance.yahoo.com/ . You will click “Historical Data” tab, which is between Statistics and Profile tabs. You will select the “Time Period”. You need at least one year worth of data. In addition, use show “Historical Prices”. The “Frequency” is “Daily”. Then, click download for the historical price data. Please convert the downloaded data in “.csv” format into “.xls” or other more flexible format and create a table for the data. Please plot the historical price over time for the stock. Think which chart is the best fit for the task.
2 Once you have done #1. Please also pick two more companies, preferably the competitors of the company in #1. Repeat task #1 for these competitors. Note that you should have the same time periods for the stocks and use daily frequency. Rather than plotting the price in three charts, plot the historical prices of the stocks over time in one chart so that we can compare the performance.
3 Assume you are the portfolio manager of a hedge fund with $3 million in cash. Assume at the beginning of the time period of your choice, you invested $1 million in each of the three stock in #2, totaling $3 million. Make tables for the invested assets for each stock as well as the fund’s total assets over time. Therefore, you should show 4 columns/rows of assets over time (3 for the individual stocks and 1 for the total). Partial shares are allowed. Rather than plotting the prices, please plot the performance of your investment in two charts over time with the individual stock performance (3 stocks in total) in one chart and the fund’s performance in another chart.
4 Please calculate the proportion of each individual stock in your fund at the end of the time period of your choice. Note that the proportion of each stock is one third at the beginning. Please use a pie chart to show your calculation results.