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Using Risk and Return Guidance for Portfolio Building

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

Author

Listed:
  • Xinrui Guo

    (Jiangxi University of Finance and Economics, Accountancy)

Abstract

After more than 30 years of rapid development, China’s capital market has provided a relatively broad investment and financing platform for all kinds of enterprises and investors. As stocks, the main trading varieties in the financial market, play an increasingly prominent role in investors’ asset allocation, for ordinary investors, how to reasonably construct a securities portfolio to obtain excess returns has become an important topic. Using the return data of individual stocks from January 1, 2024 to June 30, 2024, this paper analyzes many stocks in the A-share market, selects 10 stocks for portfolio according to five factors: industry diversity, market potential, financial stability, policy support, and social responsibility, and uses Markowitz’s mean-variance model to calculate the optimal weight ratio of each stock. Ultimately, based on the calculated Sharpe ratio, the portfolio’s returns can be assessed and used to provide retail investors with realistic investment recommendations to help them make more informed investment decisions in complex market environments.

Suggested Citation

  • Xinrui Guo, 2025. "Using Risk and Return Guidance for Portfolio Building," Advances in Economics, Business and Management Research, in: Junfeng Lu (ed.), Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024), pages 336-344, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-652-9_34
    DOI: 10.2991/978-94-6463-652-9_34
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