Alpha-beta Investment Strategy Selection Effect Evaluation

Alpha strategy and Beta strategy play a very important role in modern investment,people didn't believe the existence of arbitrage opportunities,because the Alpha strategy can't get significant earnings when it's starting,but with the stock index futures and other financial derivatives raising,the return of Alfa combination became significant.While the securities market is still weak-form efficient today,the means of Alpha strategy to obtain excess returns opportunities have been gradually excavated.By selecting stocks with outstanding quality but the underestimated intrinsic value,and hedging the systemic risk,Alpha strategy overwhelming the market gains.The Beta strategy was originally intended to yield the same revenue as the index with less transaction costs.The Beta strategy constructs a combination of replicating earnings that adjusts the index earnings at any time to achieve the effect of gaining the index earnings.Alpha strategy is based on the principle of arbitrage,while the Beta strategy is to track the return of the index.Comparing the two strategies,one pays more attention to stock picking,while the other paying more attention to timing,the two strategies in different markets often get the different performance.This article through the selection of individual stocks,the construction of an Alpha combination to verify whether it has exceeded the broader market performance in order to obtain a stable excess returns.And by adjusting the beta of the combination,we can construct a beta combination to verify whether it can track the benefits of the index.By comparing the performance of the two strategies in two years and analyzing the performance of the alpha strategy and the beta strategy under different market conditions,the advantages and disadvantages of the two strategies are differentiated,and the commonness and difference of the two strategies at different time points are summarized.In different market conditions use the two strategies with a larger proportion of funds for the superior strategy,while less proportion to invest in inferior strategy to form a new hybrid strategy.Under certain risk conditions,the revenue ofthe hybrid strategy will be higher than the benefits of a single strategy.The combined Alpha-Beta hybrid strategy will provide new investment ideas for risk-averse investors,which can effectively reduce the risk of maximum retracement and increase risk-adjusted benefits at the expense of less revenue.Mixed strategy in accordance with the different proportions of investment in the Alpha strategy and the Beta strategy of the stock portfolio,will not be based on a single strategy to increase the systemic risk or non-systemic risk.And because of the free adjustment to the proportion of investment between the two strategies,we can construct a new portfolio with certain percentage of non-systemic risk and systemic risk,more flexible than a single strategy to adapt to different markets,which is a single Alpha strategy or Beta strategy do not have.And the hybrid strategy will achieve better results than the Alpha strategy and Beta strategy alone,to build more effectively,judgement to market more accurately,and control of investment proportion and stop-loss more effectively.