“Portfolio” refers to any combination of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions.

It is a generally accepted principle that a portfolio is designed according to the investor’s risk tolerance, time frame and investment objectives. The monetary value of each asset may influence the risk/reward ratio of the portfolio.

There are many types of portfolios including the market portfolio and the zero-investment portfolio. A portfolio’s asset allocation may be managed utilizing any of the following investment approaches and principles: equal weighting, capitalization-weighting, price-weighting, risk parity, the capital asset pricing model, arbitrage pricing theory, the Jensen Index, the Treynor ratio, the Sharpe diagonal (or index) model, the value at risk model, modern portfolio theory and others.

Steps for building Profitable Portfolio

• Determine appropriate Asset Allocation
• Achieving the targets
• Reassessing the outcomes
• Re-balancing the strategy