EVALUATING FINANCIAL PERFORMANCE AND RISK CHARACTERISTICS IN DEVELOPING MARKETS: A COMPARATIVE ANALYSIS ACROSS EMERGING ECONOMIES
Abstract
This research evaluates the financial performance and risk characteristics of developing countries by analyzing a range of performance metrics over a decade. The study examines average returns, 10-year holding period returns, compound annual growth rate (CAGR), Sharpe ratio, standard deviation (SD), and value at risk (VaR) across countries including Argentina, Kenya, Malaysia, Bangladesh, South Africa, Vietnam, Sri Lanka, Colombia, Thailand, Morocco, and India. India emerges as a standout performer with the highest average returns (12.34%) and a robust 10-year holding period return (202.7%), reflecting strong long-term growth and favorable investment conditions. The compound annual growth rate (CAGR) for India (11.71%) underscores its consistent expansion. Morocco also demonstrates impressive performance with high returns and growth, while countries like Mexico and Sri Lanka show more modest results. The Sharpe ratio analysis reveals that India and Morocco offer superior risk-adjusted returns, indicating that these markets provide higher returns relative to the risk undertaken. In contrast, countries such as Nigeria and Morocco exhibit significant volatility, as evidenced by higher standard deviations (SD) and value at risk (VaR) percentages, reflecting greater investment risks.Correlation analysis highlights significant relationships between performance metrics, such as the strong positive correlation between average returns and holding period returns. This finding suggests that countries with higher average returns also tend to achieve higher long-term returns. Additionally, higher Sharpe ratios are often associated with lower standard deviations, indicating that markets with favorable risk-return profiles tend to be less volatile.