Impact of COVID-19 on Expected Return and Risks in “China Concept” Stocks Using CAPM Model: A Case Study of Alibaba and Haidilao

Abstract

The COVID-19 has a great impact on the financial market, which has made the financial market more unpredictable. In order to measure the expected return and the risks of "China concept" stocks during this special period, Alibaba and Haidilao are selected as research objective in this case study. Based on CAPM model the expected return and standard deviation for the risks are measured, i.e., the effects of COVID-19 on Chinese stock market can be predicted. According to the results, a fall in the expected return was witnessed in the two firms due to the outbreak of COVID-19 with a rise in the risk of each firm. These results offer a guideline for investors to be aware of COVID-19 effects on "China Concept" stock.