Portfolio Analysis of Stocks in Diverse Industries

Abstract

Portfolio optimization is a key issue in the current financial field. This paper aims to analyze the asset allocation of technology, financial services, industry, consumer defense and health. This paper selects ten representative company stocks from these five industries, then calculates the characteristic data and randomly assigns weights to them. Then, it uses the formulas of the two most effective models at present - Markowitz model and single index model to calculate the return, standard deviation and sharp ratio respectively, and randomly simulates a large number of data. Then it calculates the CAL curves under the two models, calculates the minimum variance frontier, efficient frontier and inefficient frontier under the five constraints that may be encountered in the actual investment, and draws the corresponding graphs. Finally, it finds out the differences and connections of figures under different constraints and makes a preliminary comparison between the effects of the two models. The results show that: first, there are slight differences in the results of the portfolio solved by the two models; Secondly, the two models can jointly reflect the portfolio characteristics under different constraints. These findings are useful for relevant investors who build portfolios in different industries.