Application Of AHP In Stock Market

With China's rapid economic growth, the stock market is also growingmore and more prosperous. Yet in Shanghai and Shenzhen stock markets, the investors who occupy a great proportion are the retail investors who are in lack of professional knowledge and tend to invest blindly and thus take greater risk. So how to conduct securities investment is an issue worth studying.Based on the comprehensive description of the present situation of AHP and the problems existing in the theory, the basic steps of how to use AHP to solve problems were briefly introduced and from the mathematic principle perspective, a brief introduction was made on the judgment of the consistency of matrix of the important concepts in AHP.Then by consulting a large amount of stock-related data and information, a hierarchical structure of factors affecting the value of stock investment was established. And questionnaires were designed to investigate the stock investment experts, the judgment matrix among different factors was established, the priority weight vectors of different factors were obtained, and the investment judgment of some of the stocks were made.Finally, a short introduction was made on Harry M. Markowitz's stock portfolio and its' concepts, theories and methods. And then by making use of the efficient frontier theory, an investment portfolio was made on the AHP-chosen stocks.Using the AHP theory, the present study tries to sort for the shares on the same plate and choose the ones with comparatively high investment value, then makes use of the effective frontier theory to figure out an investment portfolio. The purpose of this is to minimize the risk of investment and maximize the profit to enable a more reasonable investment.