Citation:

Abhay Verma, Tapsi Srivastava. "Portfolio Construction Using Markowitz's Portfolio Theory: A Study of Selected Stocks of BSE 100" International Research Journal of Economics and Management Studies, Vol. 3, No. 2, pp. 192-204, 2024.

Abstract:

A portfolio is a collection of various financial assets that a person holds, and portfolio construction is the process of selecting the financial assets that best match the person's investing goals and risk tolerance. Consequently, building a portfolio is a difficult task. This study aimed to simplify the process for investors by demonstrating how to build a two-asset portfolio while keeping Prof. Henry Markowitz's Modern Portfolio Theory in mind. From the BSE 100 Index, 10 large-cap stocks were chosen for the study. Additionally, the selected stocks' correlation with one another was discovered, and the stocks with the lowest connection with one another were found. On the indicated equities, a twosecurity portfolio building has been done. The four combinations with two companies, each with the lowest variance, standard deviation, and highest Sharpe at various allocated weights, were found.

References:

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Keywords:

Correlation, Portfolio Optimization, Return, Risk, Sharpe, Standard Deviation, Variance.