Investing in stocks of various corporations is one of the most popular ways to generate income at the moment. However, this process cannot be fully implemented without properly organized management of the financial portfolio. It implies the creation of a particular investment strategy that allows achieving the set goals (Csiszar, 2021). Although people often resort to the help of managers, recently, additional tools have appeared for this in the form of artificial intelligence and machine learning. This essay aims to explore the impact of these factors on financial portfolio management.
Artificial intelligence is one of the most popular technologies in recent times. Its principal property is the execution of functions that humans usually perform. Therefore, using these technologies in an area where people with specific skills are often required is more than justified. Thanks to machine learning, artificial intelligence can analyze past data and make highly accurate predictions (Pallathadka et al., 2021). In practice, this means several possible applications for this technology. First of all, neural networks based on machine learning allow predicting the future prices of stocks (Hu & Lin, 2019). A quick analysis of the stock market, which can be carried out using powerful computers, can allow one to take action with a stock when its price changes quickly. Secondly, machine learning makes it possible to recalculate the weights, an essential component of the portfolio and necessary for successful investment. Finally, the third advantage is quickly computing financial solutions and an asset allocation strategy (Hu & Lin, 2019). However, such functions are resource-intensive and can only be implemented on a limited scale.
Nevertheless, despite the existing limitations, various artificial intelligence applications can make portfolio management much more accessible. Currently, it is challenging to implement these technologies, relying entirely on them. However, it is possible to use elements of these approaches facilitating the work of specialists. With the further development of these technologies, even greater levels of cooperation can be achieved. Therefore, the use of artificial intelligence for financial portfolio management is promising.
References
Csiszar, J. (2021). What is portfolio management? Yahoo Finance. Web.
Hu, Y.-J., & Lin, S.-J. (2019). Deep reinforcement learning for optimizing finance portfolio management. 2019 Amity International Conference on Artificial Intelligence (AICAI). Web.
Pallathadka, H., Ramirez-Asis, E. H., Loli-Poma, T. P., Kaliyaperumal, K., Ventayen, R. J. M., & Naved, M. (2021). Applications of artificial intelligence in business management, e-commerce and finance. Materials Today: Proceedings. Web.