Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)

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Hedge Risk with Two Asset Allocation Strategies: Constant Weight Investment Strategy and Modern Portfolio Theory

Authors
Weijun Zhou1, *
1International Department, The Affiliated High School of SCNU, 1 Zhongshan Avenue West, Tianhe District, Guangzhou, China
*Corresponding author. Email: zhouwj.tony2023@gdhfi.com
Corresponding Author
Weijun Zhou
Available Online 24 February 2025.
DOI
10.2991/978-94-6463-652-9_47How to use a DOI?
Keywords
Portfolio theory; investment strategy; risk and return; diversification; hedge fund
Abstract

The financial market is recognized as a high-risk environment with numerous opportunities. Recently, stock market volatility has increased, particularly in the aftermath of the pandemic, leading to lower returns and limited macroeconomic growth, which have posed significant challenges for the financial sector. In such uncertain times, effective risk management strategies are essential for successful investment. Two key methods to mitigate risk are hedge funding and asset allocation strategies, which can protect investors from significant exposure to market fluctuations. By applying modern portfolio theory (MPT) and constant-weight investment strategies, risk-averse investors can construct diversified portfolios that optimize returns while minimizing exposure to unmanageable risk. This article illustrates these strategies with real-life examples from companies like JP Morgan and GE, demonstrating how these methods can be effectively implemented. The research aims to familiarize investors with risk hedging strategies and provide a comprehensive, step-by-step guide to building an optimal investment portfolio. Investors looking to successfully manage risk while navigating the complexity of today’s financial markets will find this contribution to be very helpful.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
24 February 2025
ISBN
978-94-6463-652-9
ISSN
2352-5428
DOI
10.2991/978-94-6463-652-9_47How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Weijun Zhou
PY  - 2025
DA  - 2025/02/24
TI  - Hedge Risk with Two Asset Allocation Strategies: Constant Weight Investment Strategy and Modern Portfolio Theory
BT  - Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
PB  - Atlantis Press
SP  - 444
EP  - 451
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-652-9_47
DO  - 10.2991/978-94-6463-652-9_47
ID  - Zhou2025
ER  -