Analysis of the State-of-art Portfolio Theory

Zheng Ying ()
Additional contact information
Zheng Ying: Xi’an Jiaotong-Liverpool University, School of Mathematics and Physics

A chapter in Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024), 2024, pp 387-395 from Springer

Abstract: Abstract Portfolio theory is a fundamental concept in investment management that aims to optimize risk and return by diversifying investments across different assets. This study explores portfolio theory, including its key concepts and methodologies, such as mean-variance optimization and alternative strategies like Risk Parity and factor-based allocation. This study highlights the importance of portfolio diversification and asset allocation in achieving optimal risk-return trade-offs. The Markowitz mean-variance optimization approach provides a foundation for constructing efficient portfolios. Alternative strategies like Risk Parity and factor-based allocation offer additional perspectives for balancing risk contributions and capturing systematic risk factors. However, the limitations of these approaches, e.g., reliance on historical data and modeling assumptions, should be considered. This study provides insights into portfolio theory, empowering investors to make informed decisions when constructing investment portfolios. By understanding the principles of diversification and asset allocation, investors can effectively manage risk and optimize returns. These results contribute to the ongoing development of investment management practices, encouraging further research and innovation in portfolio construction methodologies and risk management techniques. The research’s significance lies in its practical application for individuals and institutional investors seeking to maximize their investment outcomes while effectively managing risk.

Keywords: Portfolio theory; asset allocation; risk-return trade-off (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-408-2_44

Ordering information: This item can be ordered from
http://www.springer.com/9789464634082

DOI: 10.2991/978-94-6463-408-2_44

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().