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

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Stock Selection Strategy and Application of Portfolio Theory

Authors
Yaqi Wang1, *
1School of Social Sciences, University of Manchester, Manchester, M13 9PT, United Kingdom
*Corresponding author. Email: yaqi.wang-5@student.manchester.ac.uk
Corresponding Author
Yaqi Wang
Available Online 24 February 2025.
DOI
10.2991/978-94-6463-652-9_33How to use a DOI?
Keywords
investment method; stock selection; portfolio theory; Sharpe Ratio
Abstract

There are various stock selection methods nowadays, so choosing a process most suitable for investors is essential. This paper explores three main methods of stock selection: PE Ratio, ESG criteria, and the portfolio theory. Investors can adjust their methods by investment objectives, risk tolerance, social obligations, and other indicators. By analysing the data and performances of Ping An Bank (000001. SZ), Kweichow Moutai (600519. SH), and PetroChina Company Limited (601857. SH) in the stock market, the paper mainly introduces the application of portfolio theory. Through a series of calculations of expected return, standard deviation, correlation, and applying ‘Solver-Add in’, the researcher illustrated the graph of the Efficient Frontier of the portfolio that is comprised of stocks mentioned above and obtained the optimal combination of weights of the number of stocks purchased. Overall, the research concluded that the Sharpe Ratio increases as the risk-adjusted return of an investment improves.

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_33How 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  - Yaqi Wang
PY  - 2025
DA  - 2025/02/24
TI  - Stock Selection Strategy and Application of Portfolio Theory
BT  - Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
PB  - Atlantis Press
SP  - 329
EP  - 335
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-652-9_33
DO  - 10.2991/978-94-6463-652-9_33
ID  - Wang2025
ER  -