Investment Strategy Amid COVID-19
16 Pages Posted: 31 Mar 2020 Last revised: 8 May 2020
Date Written: May 8, 2020
Abstract
The COVID-19 pandemic and the corresponding public health response has slowed down the worlds’ economy. Given the unforeseen losses across financial markets, developing a profitable investment strategy is an uphill task. Broadly, our paper attempts to implement a multi-part strategy. The strategy involves identifying a profitable sector, replicating the high performing index within the relevant sector, and evaluating key factors to determine stock positions in the portfolio. Following this, we back-test our various positions and evaluate the results for profitability. In order to support the results, we utilize alternative data sets by analyzing public sentiment towards our selected stocks. Lastly, as future market movement remains uncertain, we develop a few hedging mechanisms to protect against downside risk.
Keywords: Biotechnology, COVID-19, Coronavirus, Economy, Factor Analysis, Healthcare, Industry Analysis, Investment Opportunities, Investment Strategy, Pharmaceutical, Pandemic, Risks Hedging, Stock Market, Alternative Data sets, Sentiment Analysis, Market Sentiment, Factor Analysis, Calendar Spread, Dispersi
JEL Classification: E22, G11
Suggested Citation: Suggested Citation