Optimising the Investor's Portfolio through Modern Portfolio Theory: Empirical Evidence from Pakistan

Diversification is considered a way to lower investment risk by using variety of avenues. The objective this study compare the portfolio performance based on mean-variance optimisation with naively diversified for textile spinning stocks in Pakistan country. data period spans from January 2015 April 2022. result shows that portfolios naïve diversification strategies outperformed terms and return sector Pakistan. Of all 9 variance-covariance estimators, sample single index covariance technique optimal estimating matrices low RMSE (root mean square error) This extends debate theory strategy developed economy emerging equity market research contributes providing framework potential investors regarding their investments