Irmak, Sezgin; Çetın, Koray
March 2009
Suleyman Demirel University Journal of Faculty of Economics & Ad;2009, Vol. 14 Issue 1, p395
Academic Journal
This study is aimed at demonstrating cluster analysis can be used to establish a starting point of efficient portfolio selection for investors in order to decrease portfolio risk. Weekly percentage incomes which were derived from daily closing prices of selected stocks from ISE National 50 Index were used as a dataset of this study. Hierarchical cluster analysis was employed and complete linkage method and pearson correlations measure were used in order to establish clusters. It is seen from the results that stocks were placed in different clusters than sectoral clusters. High correlations were observed between stocks in same clusters. To decrease the portfolio risk, this study proposes that stocks could be selected from different clusters that derived by using the method in the present study.


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