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Abstract: Financial Analytics is a key field to making investment decisions and has been developed only recently. It involves analytical thinking, computational knowledge and creative thinking about investment strategies. There are many ways to invest money. Some people invest them in Gold, some in real estate, some create a fixed deposit, some in the stock market. Some people diversify their money into different sectors of the market and invest to get an optimal profit by understanding the market. This kind of investment is called portfolio management. Unlike gambling, understanding of the portfolio and its management can actively minimize the risks associated with investment. In the proposed research we tried to study the different strategies of investing in the different sectors and building a portfolio, with the express aim of creating optimal diversified portfolios. Our methods include optimizing the weights of different investment instruments in different sectors, with implementations carried out in Python and using time-series Python libraries. We have focussed on three different investment strategies in particular: (1) Genetic algorithms help us to divide the portfolio (chromosome) into the genes (sectors) and understand it in a better way. Exploiting the existing algorithms for optimizing fitness functions in genetic algorithms, we have implemented one strategy for optimizing portfolios; (2) Efficient frontier analysis from Markowitz theory helps in investing and creating our own portfolio. We developed some of the strategies that help in displaying portfolio allocation and efficient frontier graphs; (3) We have also implemented a new criterion in vogue in the financial markets today, the “Kelly Criterion” preferred by many investors all over the world. We used real time financial stock data to validate and test our functions. All the strategies developed are modular and we also show a proof-of-concept web interface for one of the developed strategies. It is hoped that our work enables investors in making better decisions about where to park their money and converting their wealth into high-yield portfolios.
S Harshitha (Tue,) studied this question.