Diversifying a technology portfolio with videogame industry shares - An investment analysis
Mellin, Robert (2023)
Mellin, Robert
2023
Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty.
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2023041937761
https://urn.fi/URN:NBN:fi-fe2023041937761
Tiivistelmä
The videogame industry as changed drastically the last 70 years, and this change has partly been due to technological advancements, but also due to changes within the industry itself. As the videogame industry has grown, it has gained interest among companies operating within other industries, such as the technology industry. Some technology companies have created or acquired their own videogame studios, and some have started to offer products that cater to those who play videogame. These changes have brought the two industries closer to one another, and it could become hard to differentiate between the two. This study examines the videogame industry and the technology industry and aims to answer the following questions: Do investors see the videogame industry as part of the technology industry, can shares of companies in the videogame industry be used to diversify technology portfolios, and is the videogame industry a lucrative investment of diversification in upward and downward trends.
The study was conducted using qualitative and quantitative methods, with the former consisting of a literature review, and the latter being a portfolio analysis. The first research question is answered using both methods, whereas the other two are answered by the portfolio analysis. Data consists of weekly closing prices for 16 companies, of which eight represent the videogame industry, and eight the technology industry. Additionally, data of US Treasury rates, currency exchange rates, and closing prices for stock market indices are included.
The results suggest that the videogame industry is perceived by investors separately from the technology industry, as videogames are more likely considered cultural goods, rather than technology goods. The results from the portfolio analysis suggests that shares of companies from the videogame industry can both be used to diversify a technology portfolio and are lucrative investments of diversification in upward and downward trends. Videogame companies appear to have a lower risk than technology companies, which in this case means that the prices for videogame companies fluctuate less during stronger upward or downward movement.
Based on the results, the videogame industry is considered its own industry, but a continuing increase in interest for the industry can lead to the consolidation of the videogame and technology industry, where larger technology companies are the largest stakeholders. This would mean that investors who invest in the technology industry could also be required to have some understanding of the videogame industry, as it would affect the companies’ results.
The study was conducted using qualitative and quantitative methods, with the former consisting of a literature review, and the latter being a portfolio analysis. The first research question is answered using both methods, whereas the other two are answered by the portfolio analysis. Data consists of weekly closing prices for 16 companies, of which eight represent the videogame industry, and eight the technology industry. Additionally, data of US Treasury rates, currency exchange rates, and closing prices for stock market indices are included.
The results suggest that the videogame industry is perceived by investors separately from the technology industry, as videogames are more likely considered cultural goods, rather than technology goods. The results from the portfolio analysis suggests that shares of companies from the videogame industry can both be used to diversify a technology portfolio and are lucrative investments of diversification in upward and downward trends. Videogame companies appear to have a lower risk than technology companies, which in this case means that the prices for videogame companies fluctuate less during stronger upward or downward movement.
Based on the results, the videogame industry is considered its own industry, but a continuing increase in interest for the industry can lead to the consolidation of the videogame and technology industry, where larger technology companies are the largest stakeholders. This would mean that investors who invest in the technology industry could also be required to have some understanding of the videogame industry, as it would affect the companies’ results.
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