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Long-run Overseas Portfolio Diversification Benefits and Opportunities of Asian Emerging Stock Markets and Developed Markets

Author

Listed:
  • Kasilingam Lingaraja

    (Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India)

  • Murugesan Selvam

    (Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India)

  • Vinayagamoorthi Vasanth

    (Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli, Tamil Nadu, India)

  • Ramachandran Rajesh Ramkumar

    (Department of Business Administration, Bharathidasan University Model College, Vedaranyam, Tamil Nadu, India.)

Abstract

The international portfolio diversification is a function of correlation of equity markets across countries and the amount of correlation one market has with another, decides the scope of portfolio diversification. The market having high correlation with other markets generally has less scope for portfolio diversification. This research study investigated the existence of long run portfolio diversification benefits and opportunities of eight emerging stock markets in Asia and three top, benchmark index of developed markets. Models such as factor analysis, principal component and maximum likelihood, correlation matrix and graphical price movement diagram were used for estimating the portfolio diversification opportunity and benefits. It is suggested from overseas portfolio diversification analysis that in Asian emerging stock markets (especially China, India, Malaysia, Taiwan, Indonesia and Thailand), there are good opportunities for overseas portfolio diversification and the investors may earn high return.

Suggested Citation

  • Kasilingam Lingaraja & Murugesan Selvam & Vinayagamoorthi Vasanth & Ramachandran Rajesh Ramkumar, 2015. "Long-run Overseas Portfolio Diversification Benefits and Opportunities of Asian Emerging Stock Markets and Developed Markets," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 324-333.
    • Handle: RePEc:eco:journ1:2015-02-02
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    References listed on IDEAS

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    More about this item

    Keywords

    Asian Emerging Stock Markets; Developed Markets; Principal Component Method; Maximum Likelihood; Overseas Portfolio Diversification Opportunities and Benefits;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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