Application of graph theory for the purpose of diversifying the portfolio of stocks on the Banja Luka stock exchange
Application of graph theory for the purpose of diversifying the portfolio of stocks on the Banja Luka stock exchange
Author(s): Saša Vujošević, Jelena Poljašević, Milan LakićevićSubject(s): National Economy, Financial Markets
Published by: Finrar d.o.o Banja Luka
Keywords: stock market; stock portfolio; portfolio optimization; graph theory; clique;
Summary/Abstract: The graph theory has found great use in many areas, graphs can be used to model different problems. In economics various problems can be successfully solved by applying the graph theory. The use of graph theory in order to optimize the stock portfolio is useful. In this paper, we developed a characterization of the structure of the Banja Luka Stock Market from 2015. to 2021. By analysing the correlation between different stocks and applying the graph theory, “the best” portfolio was identified and a recommendation was given for the safest investments. This analysis allows diversification of the stock portfolio in order to avoid long term risk in the stock market.
Journal: Financing - naučni časopis za ekonomiju
- Issue Year: 13/2022
- Issue No: 2
- Page Range: 3-20
- Page Count: 18
- Language: English, Serbian