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Mastering R for Quantitative Finance by Edina Berlinger, Ferenc Illés, Milán Badics, Ádám Banai, Gergely Daróczi, Barbara Dömötör, Gergely Gabler, Dániel Havran, Péter Juhász, István Margitai, Balázs Márkus, Péter Medvegyev, Julia Molnár, Balázs Árpád Szűcs, Ágnes Tuza, Tamás Vadász, Kata Váradi, Ágnes Vidovics-Dancs

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Industry-specific investment

Until this point, we considered the entire sample as one. It could be a logical decision to focus only on some industries. Note that choosing the right industry to invest should not be based on past performance pattern; we rather have to analyze comovements with global economic trends over a number of years, and then, based on our prediction for the coming periods, we should pick the one with the best outlook. This method helps you to determine the right weights of the industries in your portfolio, but then, you still need to select individual shares that may overperform the others.

Of course, once one given industry is selected, we may end up with different investment rules than those on the whole sample. So, we may ...

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