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Optimizing investment strategies: Harnessing the power of K-line complex networks

Author

Listed:
  • Lan, Qiujun
  • Li, Haojie
  • Mi, Xianhua
  • Zhang, Chunyu

Abstract

The K-line is one of the most widely recognized technical indicators, garnering significant attention from investors and serving as a prevalent reference point for stock market investments. This paper provides an innovative investment strategy rooted in a complex network that is shaped by the correlations among K-lines. Its monthly return reaches an impressive 5.4 % for constituents of CSI 300 index (one of the most popular China Securities Indexes), significantly outperforming the market. The analysis also reveals i) utilizing the K-lines network, a portfolio tracking the market can be effectively assembled with ten to twenty selected stocks and ii) portfolios constructed from low-centrality nodes surpass those constructed from high-centrality nodes. This paper provides a good solution to the costly management of portfolio construction.

Suggested Citation

  • Lan, Qiujun & Li, Haojie & Mi, Xianhua & Zhang, Chunyu, 2025. "Optimizing investment strategies: Harnessing the power of K-line complex networks," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s105905602500187x
    DOI: 10.1016/j.iref.2025.104024
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