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A factor score clustering approach to analyze the biopharmaceutical sector in the Chinese market during COVID-19

Author

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  • Jiahui Xi

    (Xi’an Jiaotong-Liverpool University)

  • Conghua Wen

    (Xi’an Jiaotong-Liverpool University
    Xi’an Jiaotong-Liverpool University)

  • Yifan Tang

    (Xi’an Jiaotong-Liverpool University)

  • Feifan Zhao

    (Xi’an Jiaotong-Liverpool University)

Abstract

The biopharmaceutical sector is of considerable interest during the COVID-19 pandemic. This study aims to investigate the biopharmaceutical sector using the Shenwan Industry Classification and provides insights into investment strategies. We combine factor and cluster analyses to reduce data dimensions and detect their latent similarities. Specifically, the biopharmaceutical sector is divided into six categories based on second-level industry classification. It is observed that medical devices, medical services, biological products, and chemical pharmaceuticals maintained their upward tendency, while Chinese medicine and pharmaceutical commerce declined slightly. We also develop optimal investment strategies using various metrics for different investor types.

Suggested Citation

  • Jiahui Xi & Conghua Wen & Yifan Tang & Feifan Zhao, 2024. "A factor score clustering approach to analyze the biopharmaceutical sector in the Chinese market during COVID-19," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-28, December.
    • Handle: RePEc:spr:fininn:v:10:y:2024:i:1:d:10.1186_s40854-024-00654-y
    DOI: 10.1186/s40854-024-00654-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Factor analysis; Cluster analysis; Biopharmaceutical sector; Investment analysis;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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