Portfolio Construction and Performance in 2022 based on Index Model

Abstract

Investment has always been a course of knowledge, data and information. Different investors follow different investing strategies and develop different investment portfolios. Traditional investment portfolios seek for stability by diversifying the risks to products from a wide range of industries. However, in recent years, the rise of investment in Information Technology industry encouraged more aggressive investments and correspondingly the portfolio constructions should be more aggressive. This study will investigate the performances of the stocks of the leading companies in the IT industry and train the Index Model and test its projections. It finally arrives at the conclusion that though the price trends of different stocks in the IT industry differ a lot and are fluctuating a lot, the Index Model is applicable to the data from 2020-2021 and is proved to work through year 2022. Therefore, with sufficient admit to potential limitations and risks in the future, a more aggressive way to invest in the IT industry is somehow developed. These results shed light on guiding further construction of portfolio.