Analysis of Mean - Variance Theory and Safety-first Model for Portfolio Selection on Non-fungible Tokens (NFTs) and Collectibles

J. C. Chan*, M. N. Young, Y. T. Prasetyo, R. Nadlifatin

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

1 Citation (Scopus)

Abstract

This paper presents a comparative analysis of Mean-Variance Theory (MVT) and Safety - First model with SP/A criterion utilizing Non-Fungible Tokens and Collectibles in the crypto market. The criterion used to determine the investment pool is the mean volume price of the Top 100 NFTs and collectibles. Historical data are gathered and computed for return estimation with equal probability. Also, different portfolio weight threshold parameters were used for the mean-variance (risk-return threshold) and safety first (relative value for fear and hope). Using backtesting, safety-first portfolios show higher cumulative returns from the US dollar benchmark. Overall, this study offers portfolio optimization and an alternative portfolio selection model as references for generic investment procedures for digital asset investors, and for educational purposes.

Original languageEnglish
Title of host publicationIEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2022
PublisherIEEE Computer Society
Pages541-545
Number of pages5
ISBN (Electronic)9781665486873
DOIs
Publication statusPublished - 2022
Event2022 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2022 - Kuala Lumpur, Malaysia
Duration: 7 Dec 202210 Dec 2022

Publication series

NameIEEE International Conference on Industrial Engineering and Engineering Management
Volume2022-December
ISSN (Print)2157-3611
ISSN (Electronic)2157-362X

Conference

Conference2022 IEEE International Conference on Industrial Engineering and Engineering Management, IEEM 2022
Country/TerritoryMalaysia
CityKuala Lumpur
Period7/12/2210/12/22

Keywords

  • Mean-variance theory
  • SP/A theory
  • non-fungible tokens
  • portfolio selection
  • safety first model

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