Synthesis of stable coalitions in the economy based on fundamental criteria of the portfolio theory

Abstract

Subject. The article outlines basic principles of a mathematical model for formation of stable coalitions in the economy at the interstate level. Objectives. We focus on developing a mathematical model to build such coalitions. Methods. The study employs the portfolio theory, risk-return model, correlation and regression analysis, technical and fundamental analysis. The proposed model rests on fundamental provisions of creating a multicomponent, widely diversified investment portfolio. The model uses the key concepts, like expected profitability, risk level, industry diversification and hedging, in combination with the synthesis of a diversified group of leading commodity indices. Results. We show possibilities of using internal (based on the country’s indices) and external (based on other countries’ indices) correlation analysis, according to data on trends in economic indices, to ensure sectoral diversification within the country and maximize the international level of sectoral diversification, respectively. We performed a fundamental analysis of the condition of economies of the countries included in the coalition, and of the countries, which are considered to be included in the coalition as appropriate. The paper assesses positive and negative factors of joint functioning of the economies of the coalition countries, from the point of view of their geographic location. Conclusions. The model makes it possible to build new optimal coalitions in the economy, to analyze the practicability of further existence of previously formed coalitions, and to update the composition of coalitions, according to trends in the world economy development.