Diversification

This study aims to investigate the correlation between the diversification and accruals quality (AQ) in Iran’s mutual funds considering two main hypotheses and four sub-hypotheses. This research investigates the effects of cases such as beta of the company, the company's return on assets, debt ratio of company, firm's size, and accrual quality on the company's cost of capital and considers the effect of mutual funds’ diversification on decreasing information risk calculated through accruals quality in Tehran Stock Exchange (TSE) and Iran Farabourse listed companies. This research investigates 42 mutual funds from 2009 to 2013. Furthermore, the financial data of companies is considered for 20 years up to 2013 in order to calculate the accruals quality. The research results indicate that the factors such as the company's beta, the company's return on assets, and the ratio of firm's debt have direct correlation with cost of capital and this indicates that the increased risk in the form of beta and debt ratio increases the investors' expected return. However, the firm's size is inversely correlated with the cost of capital indicating that the increased firm's size provides the possibility of borrowing and bargaining at lower costs for companies. Furthermore, diversification in mutual funds results in lowering information risk caused by low accrual quality. Accordingly, the result of this research can help the mutual funds’ managers and investment companies to better manage their investments

(1) Background: The article proposes a methodical procedure for assessing the risk of implementing the diversification strategy of an industrial enterprise based on of management information technologies. The result of which was the improvement of the solution of practical tasks of the diversification strategy with the help of economic and statistical modeling; (2) Methods: the article proposes a methodology for assessing the risk of implementing a diversification strategy, which is based on modeling a portfolio of strategies using economic and statistical indicators: mathematical expectation; dispersions; covariances; (3) Results: As a result of the approbation of the methodical approach, the issue of optimization of complex diversification plans of enterprises in the conditions of the implementation of information technologies was considered. This approach is based on achieving such a structure of diversification of the enterprise, when the expected efficiency will be the maximum possible, and the expected risk will be the lowest. The solution to this problem was realized on the example of product diversification, when the enterprise decides to open the production of several heterogeneous goods; (4) Conclusions: It was concluded that combinations of key success factors distinguish one segment from another, then there are always factors that are part of several or many areas. The obtained calculations showed the possibility of using this methodical approach when assessing the risk of implementing a diversification strategy in the conditions of the introduction of information technologies. The possibility of its use in the context of justifying the choice of a variant of a diversified production portfolio of an enterprise organized on the basis of management information technologies is considered.

Recently, many investors have become interested in investing in cryptocurrency market. Investing in an asset carries a lot of risk and may bankrupt the investor. The main way to control this risk is portfolio diversification. In this paper, we will investigate the effect of portfolio diversification by adding cryptocurrencies to the portfolio. We evaluate the performance of seven risk-based portfolio optimization strategies. these strategies are the minimum variance, inverse volatility, L2-norm constrained minimum variance, L2-norm constrained maximum decorrelation, risk parity portfolio and maximum diversification. Our portfolios consist of three markets stocks including, Tehran Stock Exchange, Commodities and Cryptocurrencies. Also, due to the fact that the cryptocurrency market has gained a significant attraction among investors, we will examine the positive and negative effects of adding the five selected currencies, simultaneously and separately to the base portfolio, which is Tehran Stock Exchange-Commodities portfolio. We investigate that whether adding cryptocurrencies to a stock portfolio can be considered as a tool to improve a risk-based portfolio. After analyzing portfolios, the best portfolio in each strategy and the best strategy in each portfolio are introduced from the aspects of risk, return and Sharpe ratio, and finally we have concluded that entering the cryptocurrency market in most of the strategies lead to an overall increase in the return, while the approach is to minimize the risk of the portfolio. So, it can be concluded that if the main goal is to build a more diversified portfolio, better outcome can be obtained for the investor considering the return gained.