Application of Markov Chain Techniques for Selecting Efficient Financial Stocks for Investment Portfolio Construction

In this paper, we apply Markov chain techniques to select the best financial stocks listed on Ghana Stock Exchange based mean recurrent times and steady-state distribution for investment portfolio construction. Weekly stock prices from spanning January 2017 December 2020 was used study. A three-state estimate transition matrix, long-run probabilities, price movements one state another. Generally, results revealed that of showed constant recorded highest probabilities as compared point loss gain states. However, time ranges three weeks thirty-five approximately. Finally, Standard Chartered Bank, GCB, Ecobank, Cal Bank emerged top performing with respect distribution, therefore, these equities should be considered when constructing asset portfolios higher returns.