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2013•International Journal of Trade Economics and FinanceOpen access

Diversification in Portfolio Risk Management:The Case of the UAE Financial Market

Ikhlaas Gurrib, Saad Alshahrani

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Abstract

The paper looks at the existence of portfolio risk management for the UAE Financial Market. The research methodology centers on applying Modern Portfolio Theory, with particular emphasis on the Markowitz Efficient Frontier, Minimum Variance Analysis, and Portfolio Optimization. The data is essentially based on the top performing sectors of the UAE economy, and twenty key companies are chosen from each sector to test for diversification. Key findings suggest that the risk of the portfolio is lower than the weighted risk of the twenty individual stocks, i.e. efficient diversification can be achieved.

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What this paper is about

The paper looks at the existence of portfolio risk management for the UAE Financial Market. The research methodology centers on applying Modern Portfolio Theory, with particular emphasis on the Markowitz Efficient Frontier, Minimum Variance Analysis, and Portfolio Optimization. The data is essentially based on the top performing sectors of the UAE economy, and twenty key companies are chosen from each sector to test for diversification. Key findings suggest that the risk of the portfolio is lower than the weighted risk of the twenty individual stocks, i.e. efficient diversification can be achieved.

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OpenAlex reports 9 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

The paper looks at the existence of portfolio risk management for the UAE Financial Market. The research methodology centers on applying Modern Portfolio Theory, with particular emphasis on the Markowitz Efficient Frontier, Minimum Variance Analysis, and Portfolio Optimization. The data is essentially based on the top performing sectors of the UAE economy, and twenty key companies are chosen from each sector to test for diversification. Key findings suggest that the risk of the portfolio is lower than the weighted risk of the twenty individual stocks, i.e. efficient diversification can be achieved.

Key concepts: Diversification (marketing strategy), Efficient frontier, Application portfolio management, Portfolio optimization, Portfolio, Modern portfolio theory, Post-modern portfolio theory, Business

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