A study of stock market performance of Finnish technology-oriented companies
Peltoniemi, Santtu (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024052817014
https://urn.fi/URN:NBN:fi:amk-2024052817014
Tiivistelmä
High stock returns of technology-oriented companies has been a trend throughout the decades. World is changing rapidly, and many companies and research institutions pursue new technologies and innovations. Thus, investor’s interest in technology-oriented stock markets is not unexpected. However, technology-oriented stocks are considered to be risky investments as they are volatile and not all of the companies are able to capitalize their products. The main objective of this dissertation is to explore the stock market risk and return relationship of the technology-oriented Finnish companies and to explore whether the stock returns are finding their association with expected returns calculated using Capital asset pricing model (CAPM) and Jensen’s alpha.
Thesis adapted deductive methodology with quantitative approach. As the Finnish technology-sector is limited in size a decision to include not purely technology companies but closely related companies was made. The sample consisted of 25 Finnish technology-oriented companies traded in Helsinki Stock Exchange and First North Helsinki and three indexes for comparative calculations. The timeframe of the study was 2020-2022 which makes the sample size 75 firm-years. The data of individual stocks and indexes was collected from OMX Nordic website and compiled in a Microsoft Excel spreadsheet by the author. In addition, data analysis was performed using Microsoft Excel.
Results point out that the portfolio overperformed the market during the period and had a positive Jensen’s alpha. In 2020 and 2021 the stock returns were abnormal whereas in 2022, the stock returns were negative. However, the overall period returns of the portfolio was positive. Results also indicate that high risk associated with increased risk. Analysis was made and presented in company-specific (micro) and portfolio (macro) levels. In addition, current study limitations and recommendations for further study were presented.
Thesis adapted deductive methodology with quantitative approach. As the Finnish technology-sector is limited in size a decision to include not purely technology companies but closely related companies was made. The sample consisted of 25 Finnish technology-oriented companies traded in Helsinki Stock Exchange and First North Helsinki and three indexes for comparative calculations. The timeframe of the study was 2020-2022 which makes the sample size 75 firm-years. The data of individual stocks and indexes was collected from OMX Nordic website and compiled in a Microsoft Excel spreadsheet by the author. In addition, data analysis was performed using Microsoft Excel.
Results point out that the portfolio overperformed the market during the period and had a positive Jensen’s alpha. In 2020 and 2021 the stock returns were abnormal whereas in 2022, the stock returns were negative. However, the overall period returns of the portfolio was positive. Results also indicate that high risk associated with increased risk. Analysis was made and presented in company-specific (micro) and portfolio (macro) levels. In addition, current study limitations and recommendations for further study were presented.