Risk Analysis and Portfolio Design in Stock Investment

Abstract

Contemporarily, its common to see unrest in global financial market, so some correspond-ing analysis on investing risks have made, e.g., CAPM model. For the similar reason, in order to obtain an efficient and safe method to do stock investment in any market envi-ronment, we mainly investigate the risks caused during the process of stock investment based on stocks of ten different corporations. This study analyzes peoples investment ac-tions in bull market and in bear market, and carry out classifications of possible risks in the stock investment. According to the risk analysis, portfolio is important for reducing risks and then choose stocks of ten famous corporations to do portfolio design. On the test data, linear regression and CAMP model are adopted to obtain the and get a covariance table of these ten stocks. In terms of these two judgement values, we judge the level of risk and acquire appropriate portfolio by Python. Based on the evaluation, one can get a clear pro-cess of risk analysis and this research will have certain guiding significance for future stock investment. These results shed light on guiding further exploration of how to reduce investing risks.