Criteria Analysis Aiding Portfolio Selection Using Dematel

Portfolio analysis is one of the major areas of research in the financial sector, where the uncertainty and dynamism plays a dominant role. Portfolio analysis primarily involves two major aspects: portfolio selection and portfolio optimization. A portfolio may include numerous industries and related companies. The criteria for selection of industries in the portfolio shall be different from the criteria considered for company selection. The application of Multi Criteria Decision Making (MCDM) techniques gains importance in this situation. The paper identifies and evaluates various criteria relevant for companies, which can aid in developing a framework for portfolio analysis. Here the companies listed in National Stock Exchange (NSE) are taken as the basis for the identification of relevant criteria to formulate a portfolio in an Indian context. Thereafter, DEcision MAking Trial and Evaluation Laboratory (DEMATEL), an MCDM technique is applied to identify the importance and causal relationship among the identified criteria. The findings arrived at are expected to facilitate choice under conflicting multiple criteria scenario for portfolio selection. The results shall also form a base work for portfolio selection model.