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Entrepreneurship and Sustainability Issues Open Access
Scopus - coverage starting with 2017 material
Received: 2017-10-25  |  Accepted: 2018-02-14  |  Published: 2018-03-30

Title

Sectoral integration and investment diversification opportunities: evidence from Colombo Stock Exchange


Abstract

This study examined the diversification opportunities within sectors of Colombo Stock Exchange by measuring co-integration among sectors. Those sectors of CSE which are not integrated with others offer good diversification opportunities. Moreover, the study also applies Granger Causality Test to determine which sectors of CSE cause other sectors. This helps an investor informing a diversified portfolio. This study employed daily closing indices of all sectors listed in Colombo Stock Exchange during the period from 1-12-2003 to 31-8-2016. Multivariate Co-integration and Pairwise Co-integration Tests are applied to determine integration among sectors and Granger Causality to determine causal relation among these Sectors of CSE. Stationarity by unit root test revealed that the fourteen sectors are selected for running cointgeration at Level 1. Findings examined that no sector is integrated with other sectors. Thus, CSE provides excellent diversification opportunity to the investors. From an investor point of view, the findings of the study are helpful for a well-diversified portfolio by selecting stocks from those sectors which are not integrated with other sectors and minimize the unsystematic risk. This study significantly contribute the existing literature particularly those investors who want to diversify their portfolios domestically rather internationally.


Keywords

sectoral integration, diversification, portfolio, investment choice, Colombo Stock Exchange


JEL classifications

F36 , G11


URI

http://jssidoi.org/jesi/article/164


DOI


HAL


Pages

514-527


Funding


This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Ahmed, Awais
University of Lahore, Lahore, Pakistan http://www.uol.edu.pk
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Ali, Rizwan
University of Lahore, Lahore, Pakistan http://www.uol.edu.pk
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Ejaz, Abdullah
University of Lahore, Lahore, Pakistan http://www.uol.edu.pk
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Ahmad, Muhammad Ishfaq
University of Lahore, Lahore, Pakistan http://www.uol.edu.pk
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Journal title

Entrepreneurship and Sustainability Issues

Volume

5


Number

3


Issue date

March 2018


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 371  |  PDF downloads: 267

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