Applied Methods for Measuring Portfolio Risk to Optimize Portfolio Selection

Vietnam's economy is increasingly integrating with the global market, resulting in elevated financial risks for investors due to market fluctuations in price, interest rates, and exchange rates. These factors can lead to significant financial losses. Investors, therefore, need effective risk management strategies to mitigate these losses. This paper introduces methodologies for determining profitability ratios and standard deviations to evaluate financial risks within the Vietnamese economy. Such methodologies assist investors in selecting optimal portfolios that minimize potential losses while maximizing returns. The proposed model provides insights into the realized profits from investment portfolios and helps investors assess the factors impacting their capital. It also guides them in establishing the optimal investment portfolio density and calculating the expected profitability rate to achieve maximum profit.