A factor score clustering approach to analyze the biopharmaceutical sector in the Chinese market during COVID-19

Jiahui Xi, Conghua Wen (), Yifan Tang and Feifan Zhao
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Jiahui Xi: Xi’an Jiaotong-Liverpool University
Conghua Wen: Xi’an Jiaotong-Liverpool University
Yifan Tang: Xi’an Jiaotong-Liverpool University
Feifan Zhao: Xi’an Jiaotong-Liverpool University

Financial Innovation, 2024, vol. 10, issue 1, 1-28

Abstract: Abstract The biopharmaceutical sector is of considerable interest during the COVID-19 pandemic. This study aims to investigate the biopharmaceutical sector using the Shenwan Industry Classification and provides insights into investment strategies. We combine factor and cluster analyses to reduce data dimensions and detect their latent similarities. Specifically, the biopharmaceutical sector is divided into six categories based on second-level industry classification. It is observed that medical devices, medical services, biological products, and chemical pharmaceuticals maintained their upward tendency, while Chinese medicine and pharmaceutical commerce declined slightly. We also develop optimal investment strategies using various metrics for different investor types.

Keywords: Factor analysis; Cluster analysis; Biopharmaceutical sector; Investment analysis (search for similar items in EconPapers)
JEL-codes: C38 C61 G11 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1186/s40854-024-00654-y

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