A New Decision-Making Method for Stock Portfolio Selection Based on Computing with Linguistic Assessment.pdfVIP

Hindawi Publishing Corporation Journal of Applied Mathematics and Decision Sciences Volume 2009, Article ID 897024, 20 pages doi:10.1155/2009/897024 Research Article A New Decision-Making Method for Stock Portfolio Selection Based on Computing with Linguistic Assessment Chen-Tung Chen1 and Wei-Zhan Hung2 1 Department of Information Management, National United University, Miao-Li 36003, Taiwan 2 Graduate Institute of Management, National United University, Miao-Li 36003, Taiwan Correspondence should be addressed to Chen-Tung Chen, ctchen@.tw Received 30 November 2008; Revised 18 March 2009; Accepted 13 May 2009 Recommended by Lean Yu The purpose of stock portfolio selection is how to allocate the capital to a large number of stocks in order to bring a most profitable return for investors. In most of past literatures, experts considered the portfolio of selection problem only based on past crisp or quantitative data. However, many qualitative and quantitative factors will influence the stock portfolio selection in real investment situation. It is very important for experts or decision-makers to use their experience or knowledge to predict the performance of each stock and make a stock portfolio. Because of the knowledge, experience, and background of each expert are different and vague, different types of 2-tuple linguistic variable are suitable used to express experts’ opinions for the performance evaluation of each stock with respect to criteria. According to the linguistic evaluations of experts, the linguistic TOPSIS and linguistic ELECTRE methods are combined to present a new decision- making method for dealing with stock selection problems in this paper. Once the investment set has been determined, the risk preferences of investo