Investment Portfolio Security Strategy Based on the Proposed SLPI-M Model in the Digital Environment
A Comparative Analytical Study of the Dubai Financial Market and a Number of Cryptocurrencies
DOI:
https://doi.org/10.25098/9.2.22Keywords:
Optimal investment portfolio, investment portfolio insurance strategies, stop-loss strategy, SLPI-M model, cryptocurrency marketAbstract
The study aims to test a stop-loss insurance strategy using a proposed model (SLPI-M). This aims to bridge the gap in stop-loss strategies that lack mechanisms to determine the optimal minimum stop-loss limit. The study presented a proposed model for determining the optimal minimum stop-loss, and it was tested. During the testing process, attention was paid to the digital environment represented by the cryptocurrency market. The study population was represented in two fields: the first included (65) companies listed on the Dubai Financial Market from (9) sectors, and the second represented cryptocurrencies listed on the (coingecko) platform. The study sample included (27) companies from (7) different sectors, which met the condition of continuous trading in the company's shares without interruption during the period covered by the study. The number was reduced to (8) companies listed on the Dubai Financial Market, which had been included in an optimal investment portfolio built according to the simple incremental method within the framework of the doctoral thesis from which this study was derived. As for cryptocurrencies, the sample included (4) cryptocurrencies selected based on market capitalization and trading continuity during the study period, which spanned the period from January 1, 2022, to December 31, 2022. To test the study objectives, the proposed model was used. The study reached several conclusions, including that the investment portfolio insurance strategy based on a stop-loss model, using the proposed model, is effective in reducing losses and achieving its objectives in highly volatile cryptocurrency markets, while the results showed the opposite when applied to the more stable stock market. In light of the study results, several recommendations were put forward, most notably the recommendation to adopt a stop-loss strategy based on the SLPI-M model by investors and investment fund managers in the cryptocurrency market, in addition to the recommendation to test this model in different financial markets.
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