Possibility of Applying Regional Diversification in Capital Markets of Bosnia and Herzegovina and Republic of Serbia
Generally, risk is an uncertainty associated with future outcomes or events. In economic terms, risk is an expected deviation from the planned return of real, financial and intangible assets, of loss or cash flows associated with the uncertain event. The most famous way of reducing the overall risk is diversification of assets. Thus, diversification is a process of investment in a number of unrelated or partially related assets or activities in order to achieve stable business operation, and it shows that portfolios are poor to the extent that they should be avoided in order to increase yields and reduce risk. The portfolio diversification works because prices of different shares do not move in the entirely same direction. Statisticians generally mean the same thing when they say that share price changes are nothing less than perfectly correlated. The main objective of this paper is to discuss the impact of the global financial crisis on the movement tendency of the stock exchange index in the Western Balkans, developed countries and individual EU member states, and determine the feasibility of implementing regional diversification in order to further reduce risk and establish the portfolio of share with the lowest coefficients of correlation.
Volume (Year): 46 (2013)
Issue (Month): 3-4 ()
|Contact details of provider:|| Postal: |
Phone: +381 11 2622 357, 2623-055
Fax: +381 11 2181 471
Web page: http://www.ien.bg.ac.rs
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ibg:eajour:v:46:y:2013:i:3-4:p:52-71. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zorica Bozic)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.