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

<Previous Article In Volume
Next Article In Volume>

Portfolio Theory in real life practice: Building Optimal Portfolio

Authors
Junxiao Qian1, *
1Business Economics (SocSci) in the College of Social Sciences, Glasgow University, Glasgow, Scotland, G12 8QQ, United Kingdom
*Corresponding author. Email: QJX18800511061@outlook.com
Corresponding Author
Junxiao Qian
Available Online 24 February 2025.
DOI
10.2991/978-94-6463-652-9_38How to use a DOI?
Keywords
Portfolio Theory; Mean-Variance Optimisation; Risk-Adjusted Return; Sharpe Ratio; Asset Allocation
Abstract

This paper aims to give a detailed analysis of portfolio theory, a core theory in the current financial management field that enables the investor to determine the optimal combination of various assets in the portfolio to enhance returns while reducing risks. The research focuses on applying the identified portfolio theories to the sample of organisations of different sectors: ICT, health care and technology, and consumer goods. Historical financial data are used in the study context to compute the expected returns, standard deviations or coefficient of variations, and correlation coefficients expected in the case of the selected assets. On this basis, the weights of these assets are found optimally with the aid of mean-variance optimisation and the Sharpe ratio is used to measure the portfolio’s risk-adjusted return. Although some data restrictions might impact the accuracy of the findings, the work has profound implications for understanding the real-world applications of the portfolio theory. The research enhances the knowledge of investors on the way they can use portfolio theory and build portfolios that are good fits for their risk appetite and can enable them to achieve their financial objectives in today’s world.

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.

Download article (PDF)

<Previous Article In Volume
Next Article In Volume>
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_38How 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  - Junxiao Qian
PY  - 2025
DA  - 2025/02/24
TI  - Portfolio Theory in real life practice: Building Optimal Portfolio
BT  - Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
PB  - Atlantis Press
SP  - 369
EP  - 376
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-652-9_38
DO  - 10.2991/978-94-6463-652-9_38
ID  - Qian2025
ER  -