Empirical Analysis of Optimal Stock Portfolio under the Background of COVID-19

¹ School of Zhiyuan Shanghai Jiao Tong University Shanghai 200240, China
² School of International Education Wuhan University of Technology Wuhan, Hubei 430070, China
³ School of Economics and Management Sichuan Normal University, Chengdu, Chengdu, Sichuan 610100, China

^* Corresponding author: liluozhou@protonmail.com
^† These authors contributed equally.

Abstract

In the present market, there are various kinds of financial products and derivatives designed for customers, the most basic and universal of which are stocks. However, while understanding how much profit and risk that one stock can bring is relatively simple, it is more difficult and trickier to find out a suitable investment portfolio for customers, especially under particular circumstances. Therefore, this paper try to build a model to figure out the portfolio with the highest utility in the crown virus background. The utility is defined based on several theories on customers’ behavior and takes many other factors that may play a crucial role on the extent of customer satisfaction into consideration. To simplify the model and focus on significant financial products, this article comes up with several necessary implications. After numerical computation, the result, a stock portfolio with the highest utility function for a given condition, is presented as an example to show how our model works. Finally, the paper analyzes the result obtained, provides a brief discussion on the pros and cons of our model, and eventually lists our possible future research fields.