An evolutionary algorithm with a new coding scheme for multi-objective portfolio optimization

  • Yi Chen
  • , Aimin Zhou*
  • , Rongfang Zhou
  • , Peng He
  • , Yong Zhao
  • , Lihua Dong
  • *Corresponding author for this work

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

4 Scopus citations

Abstract

A portfolio optimization problem involves optimal allocation of finite capital to a series of assets to achieve an acceptable trade-off between profit and risk in a given investment period. In the paper, the extended Markowitz’s mean-variance portfolio optimization model is studied. A major challenge with this model is that it contains both discrete and continuous decision variables, which represent the assignment and allocation of assets respectively. To deal with this hard problem, this paper proposes an evolutionary algorithm with a new coding scheme that converts discrete variables into continuous ones. By this way, the mixed variables can be handled, and some of the constraints are naturally satisfied. The new approach is empirically studied and the experiment results indicate its efficiency.

Original languageEnglish
Title of host publicationSimulated Evolution and Learning - 11th International Conference, SEAL 2017, Proceedings
EditorsXiaodong Li, Mengjie Zhang, Qingfu Zhang, Martin Middendorf, Kay Chen Tan, Ying Tan, Yaochu Jin, Yuhui Shi, Ke Tang
PublisherSpringer Verlag
Pages97-109
Number of pages13
ISBN (Print)9783319687582
DOIs
StatePublished - 2017
Event11th International Conference on Simulated Evolution and Learning, SEAL 2017 - Shenzhen, China
Duration: 10 Nov 201713 Nov 2017

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume10593 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference11th International Conference on Simulated Evolution and Learning, SEAL 2017
Country/TerritoryChina
CityShenzhen
Period10/11/1713/11/17

Keywords

  • Constraints handling
  • Mixed variables
  • Multi-objective portfolio

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