Research on Optimization of Investment Portfolio in the New Energy Vehicle Industry Chain

Abstract

The urgent environmental problems caused by global climate change have propelled the rise of the new energy vehicle industry. Nations and business are also focusing on the research and promotion of this industry. Due to the fast development, investors face both promised investment opportunities and complicated challenges. Against this backdrop, a vital issue, which is how to choose the optimal investment portfolio to achieve the maximum possible return while experience the lowest possible risk, arises. This paper collects the closing price of stocks from 5 companies in different sectors of the new energy vehicle industry, with the period from 19 August 2022 to 18 August 2023 and then computes the variance of closing price and average return of the stocks, finally uses the COVAR function in excel to obtain the covariance matrix. After processing the data, the paper applies the Markowitz mean-variance model to obtain the optimal portfolio formation. Results show that this industry may not be a good choice for investors currently since all three portfolios show negative returns, while the negativity do not completely negate the long-term potential of this industry as the development of the industry can be influenced by various factors. It is therefore to conduct deeper research to better understand the industry dynamics and future trend.