Portfolio Optimization Using Genetic Algorithm
S. Sowmya, Rhimjhim Daftary, Soumya Banerjee, Ankit Basak · 2025
This research explores the application of a Genetic Algorithm (GA) for portfolio optimization within the context of the Nifty50, a diversified index representing prominent companies in the Indian stock market. Traditional portfolio optimization methods often face challenges in capturing complex relationships and dynamic market conditions. This study employs monthly data spanning from April 2018 to March 2023 to develop an investment portfolio strategy. Initially, companies with positive average returns and negative skewness are identified. Among these, stocks with low volatility and high sensitivity to market changes are selected using a 4-Quadrant Map. Using Genetic Algorithm, an optimum portfolio is developed to minimize risk while maximizing returns. The study aims to assist investors in making prudent investment decisions by providing guidance on stock selection and optimal investment allocation.