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Fuzzy Based Investment Portfolio Management

  • Mayank PandeyEmail author
  • Vikas Singh
  • Nishchal K. Verma
Chapter
Part of the Fuzzy Management Methods book series (FMM)

Abstract

In the present business environment, investment is an essential part carried out at both organizational as well as individual level. To obtain maximum return with minimum risk, investment is done across the diverse areas by maintaining a portfolio. For maximum possible gain, the portfolio needs to be optimally managed which involves selecting the best possible investment opportunities and avoiding the high volatile and high risk stocks. In the recent times, the use of soft computing based methods of fuzzy and neuro-fuzzy models has become increasingly popular for optimal selection and rejection of the portfolio elements to maximize the investor’s profit. A lot of investment and trading is still carried out based on an individual or a group of decision makers’ verbal instructions which are opaque in nature. Thus in this case, the role of fuzzy in transforming these vague sentences into the language and the machines can understand is phenomenal where the traditional mean variance models are lagging. Also, the self-learning feature of the given models are better than the statistical modeling based optimization models. In addition to that, generation of large amount of vague data in today’s digital world have given the fuzzy based methods a decisive edge over the statistical models. The problems related with volatility are dealt with probabilistic fuzzy c-means clustering and functional fuzzy rule based models. Overall, applying fuzzy based systems for portfolio optimization and managing is a novel approach with improved performance.

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Mayank Pandey
    • 1
    Email author
  • Vikas Singh
    • 1
  • Nishchal K. Verma
    • 1
  1. 1.Department of Electrical EngineeringIndian Institute of Technology KanpurKanpurIndia

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