Relationship Between Stocks and Index-A Study

Abstract

Any rational investor, before investing his or her investible wealth in the stock, analyses the risk associated with the particular stock. Risk consists of two components, the systematic risk and unsystematic risk. The systematic risk affects the market as a whole. Often we read in the newspaper that the stock market is in the bear hug or in the bull grip. This indicates that the entire market is moving in a particular direction either downward or upward. if the relation between stocks and index is strong, then index and stock moves together. In this paper we selected some stocks and analyzed their relationship with index of the market.