The Optimal Portfolio of Stocks for Generation Z retail investors using The Single Index Model and The Constant Correlation Model in The LQ45 Index
Journal Title: International Journal of Current Science Research and Review - Year 2023, Vol 6, Issue 12
Abstract
Generation Z retail investors, characterized by a higher risk tolerance for risky assets, seek to balance return and risk in their portfolio of investments. To mitigate market risk, they employ portfolio selection models to utilize Markowitz’s Diversification Principle. By using a portfolio selection model (an allocation model) for a risky asset, it helps investors allocate their investment budget to their selected stocks. For that reason, this study compares the Single Index Model and the Constant Correlation Model for portfolio allocation using stocks listed in the LQ45 index during stable (2018–2019) and global crisis (2020–2021) conditions. Results indicate the robustness of the constant correlation model in the stable condition scenario. During crises, however, both models can outperform the risk-free rate. Model assumptions play a crucial role in portfolio outcomes, emphasizing the importance of aligning investments with personal risk-return preferences. While no universal model fits all, these methods offer valuable options for tailoring risk-return profiles.
Authors and Affiliations
Erlanda Maulidia Sultana Gusta Wijaya, Subiakto Soekarno
Keywords
Related Articles
- EP ID EP724614
- DOI 10.47191/ijcsrr/V6-i12-07
- Views 80
- Downloads 0
Power Relations between Program Keluarga Harapan (PKH) Facilitators and Beneficiary Families (KPM) (Study on PKH Implementation in Malang Regency)
Program Keluarga Harapan (PKH) is a government social assistance program that aims to reduce poverty and improve the welfare of poor families in Indonesia. The PKH program seeks to reduce this social and economic inequal...
Management of Islamic Aqeedah Based Curriculum at Khoiru Ummah Tahfizh Plus Elementary School
Management of Islamic aqedah based curriculum is implemented by Tahfidz Plus School (STP) SDIT Khoiru Ummah Liwa Lampung Barat. The process of planning, organizing, implementing and supervising the curriculum is implemen...
The COSO ERM Implementation Perspective Analysis on Manufacturing Company: Case Study PT Alcomex Indo
Internal control implementation of PT Alcomex Indo, a manufacturing company focused on aluminum extrusion based on COSO ERM perspective. This research conclude that the internal control of objective settings in the expen...
Cyberloafing Scale in Academic Settings
Cybrloafing in academic settings refers to students’ use of the internet for non-academic purposes during lectures, which can disrupt the learning process. This study aims to develop and validate the Academic Cyberloafin...
A Generic Approach to Entity Resolution Mechanisms for Big Data on Real World Match Problems in the Global Oil and Gas Sector
Complex challenges are facing the global oil and gas industry. Oil prices are dropping due to OPEC production level, US oil boom, and other factors. Many experts believe that prices of oil will remain low for years at eq...