Investment Strategy Amid COVID-19

16 Pages Posted: 31 Mar 2020 Last revised: 8 May 2020

See all articles by Jiaye Wang

Jiaye Wang

University of Illinois at Urbana-Champaign

Maulin Shah

University of Illinois at Urbana-Champaign

Nam Nguyen

University of Illinois at Urbana-Champaign

Neelaj Maity

University of Illinois at Urbana-Champaign

Yihua Liu

University of Illinois at Urbana-Champaign

Tony Zhang

University of Illinois Urbana Champaign

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

Wang, Jiaye and Shah, Maulin and Nguyen, Nam and Maity, Neelaj and Liu, Yihua and Zhang, Qingquan, Investment Strategy Amid COVID-19 (May 8, 2020). Available at SSRN: https://ssrn.com/abstract=3563631 or http://dx.doi.org/10.2139/ssrn.3563631

Jiaye Wang

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States
2179798020 (Phone)

Maulin Shah

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States

Nam Nguyen

University of Illinois at Urbana-Champaign ( email )

Champaign, IL 61820
United States
(224) 518-8681 (Phone)

Neelaj Maity

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States

Yihua Liu

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL Champaign 61820
United States

Qingquan Zhang (Contact Author)

University of Illinois Urbana Champaign ( email )

Champaign, IL 61820
United States
6128406736 (Phone)
61820 (Fax)

HOME PAGE: http://https://giesbusiness.illinois.edu/profile/qingquan-zhang

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