The technology and clothing sector Essay

Published: 2019-12-29 02:41:20
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Category: Technology

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Based on the standard deviations and means across industries with respect to recognized variables, it can be argued that the technology and clothing sector have improved their financial performance over the last year. Note that the standard deviation of the technology sector is 1. 64 a small variation from the mean. Note that the earnings per share of the same industry indicate an improvement. Note also that the mean returns on equity for both industries are 56. 58 and 18. 14 respectively with comparatively small deviations (using ratio).

The other three industries showed little or no improvement in their financial performance. Note that although the standard deviation is small compared to the technology and clothing sectors, its ratios are almost equal to 1, indicating slow growth. Note that both the technology and clothing sectors have a current ratio > 1. From a statistical point of view, this can either indicate a decrease or increase in its financial performance. Using the return on equity ratios, we can verify that both industries have improved their financial performance.

Note again that calculating the mean/SD ratio for the said variable, the two sectors will yield about . 25 (technology) and 3. 206. Based on the t-test, there is significant correlation between the technology and clothing industries. The correlation can be described as negatively related. Non-significant negative correlation (weak relationship) can be found between the technology and utilities sectors, and utilities and clothing sectors. All other indicate weak positive relationship.

Based from theory, it is possible that the sectors which have strong negative relationship compete for the same resources such as raw materials or labor, all other things follow suit. It may be plausible to invest in either the technology or clothing industries for two apparent reasons. An increase in the size of one industry will lead to a decrease in the size of the other industry. Investing in one of the industry will ensure higher yields in the future. In addition, much of the other industries indicate lower returns.

In short, the higher the risks (as in the case of the technology and clothing sectors and their negative relationship), the higher the rate of return. A more appealing strategy of investment is to subdivide the investment portfolio into two parts those reserved for the technology sector and those reserved for the clothing sector. Supposing the technology sector decreases in size or showed poor financial performance, then the investment on the clothing sector will inevitably result to increased returns. Again, investing in the other sectors will either lead to poor returns or wasted investment.

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