Browsing by Subject "hajauttaminen"

The aim of this study is to find out how well the forest properties located in the regions of Pirkanmaa and Central Finland fit into the investment portfolio in order to reduce the risk. The research is based on Harry Markowitz's modern portfolio theory. In this study, an efficient frontier and a minimum variance portfolio are formed from three different investment alternatives. Portfolio investment options in this study are forest properties, shares and interest. Previous studies focusing on forest placement show that the return on forest investments is rather weak compared to equity investments, and forest investment itself is not very profitable. However, the research also indicates that the returns on forest investments are poorly correlated with equity investments, and therefore they fit into the investment portfolio to diversify the risk. The data used in the study were historical statistics on forest properties, shares and interest between years 1991 and 2018. For each investment option, the average return and the standard deviation of the return were calculated from historical returns. In addition, covariances and correlations between investment alternatives were calculated. Based on this information, a minimal variance portfolio and an efficient frontier were created using Excel's Solver. Comparison of the minimum variance portfolio and efficient frontier´s portfolios wages concluded how well forest property investments fit into the portfolio in order to reduce its risk. The study found that the correlation coefficient between forest property investments and shares has been negative in the period 1991–2018. In addition, the share of forest properties in the efficient frontier portfolios was significant at most risk levels: with 9,5 percent risk level, forest properties wage in portfolio was 70 percent. These results led to the conclusion that forest properties located in the provinces of Pirkanmaa and Central Finland were able to diversify and reduce the risk of the portfolio.