Abstract

This research aims to propose a new strategy for an investor when using Black Litterman Model (BLM) in order to gain higher performance on their portfolio. The proposed strategy is starting to cluster stocks then combine it with allocation weight following the Black-Litterman rules. We describe two scenarios combination cluster and BLM in the processing of portfolio construction then we investigate both performances measured with the Sharpe index. In this research, we limited for expressing views which only use absolute views. We find that a result from combining the cluster technique will help investors to determine which assets that will be given certain views on their portfolio.

Details

Title
Combining Black-Litterman model with clustering on portfolio construction
Author
Subekti, R 1 ; Sari, E Ratna 1 ; Kusumawati, R 1 

 Mathematics Education Department, Faculty of Mathematics and Natural Sciences, Universitas Negeri Yogyakarta, Yogyakarta, Indonesia 
Publication year
2019
Publication date
Oct 2019
Publisher
IOP Publishing
ISSN
17426588
e-ISSN
17426596
Source type
Scholarly Journal
Language of publication
English
ProQuest document ID
2567988048
Copyright
© 2019. This work is published under http://creativecommons.org/licenses/by/3.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.