1. Introduction

The discipline of portfolio management involves systematically examining the merits and drawbacks, goals, resource requirements, and potential risks and rewards associated with undertaking various activities within a portfolio. The primary aim is to optimize returns while considering the associated risks. Initiating the portfolio management process involves gathering essential information, such as the financial requirements for a project. Once the analysis considers factors that investors consider during the evaluation period, including the portfolio's return rate and risk, the organization can strategically choose projects or securities aligned with its overarching strategy [1].

Interpreting portfolio management involves delving into two key elements: the portfolio itself and the art of management. On one front, a portfolio is a composite assortment of stocks, bonds, financial derivatives, and assorted assets safeguarded by investors or financial entities. The primary objective is risk diversification, achieved through a two-tiered combination strategy. The first tier grapples with the delicate balance between safety and profitability, juxtaposing risky and risk-free assets. The second tier navigates the amalgamation of risky assets, strategically interweaving less correlated elements to push the portfolio's efficient frontier further from the perils of risk. Simultaneously, the managerial facet strives to amplify returns and curtail risks within the portfolio, manifesting in various forms of portfolio management methodologies. In the article IT Portfolio Management, a stock sorting portfolio management based on a multi-attribute decision-making approach is proposed, which has been widely applied in the field of financial management, and it is through this type of management that the portfolio has the ability to maximize returns. From here, it can be seen that portfolio management is indispensable and has a great value and role in investment and financial decisions [2].

Investment decision-making is, in fact, a way to put funds in different aspects of different structures in different forms of management of funds. The purpose is to maximize the return on funds to achieve the appreciation of the original assets, and portfolio management in investment decision-making belongs to a kind of systematic optimization of investment decision-making, for investment management, the significance is very great.

2. Objectives and Strategies

Risk and return are important components of an investment portfolio. Portfolio Risk Management (PRM) is a risk-informed approach that is often used to improve the safe management of a portfolio in the context of a business, and it is not an added extra process but rather an improvement based on the original approach. Minimizing risk is a key condition for the success of an investment portfolio, and risk minimization starts with understanding the premise of risk and adopting effective management and decision-making to avoid risk. Minimizing portfolio risk is conducive to investment and financial decision-making in achieving a certain rate of return while effectively controlling uncertainties and risk factors, thus achieving the optimal and most rational investment and financial decision-making [3].

By prioritizing risk reduction and return maximization, investors gain insights into the advantages of diversifying their portfolios through various data and reports. Markowitz, in 1952, introduced a method to minimize the variance of the underlying portfolio by determining optimal budget share weights. Expanding on this concept, Hatemi-J, and El Khatib proposed in 2015 to identify weights that maximize the risk-adjusted return, providing a solution for the 2*2 case [4]. Analyzing data reveals that investors frequently gravitate towards portfolios comprising two or more assets, with diversified portfolios achieving an optimal balance between risk and return. Another crucial metric, the Sharpe ratio, gauges the excess return to risk in a portfolio by measuring the ratio of excess return (portfolio return minus risk-free asset return) to total risk. Diversified portfolios, coupled with the utilization of the Sharpe ratio, offer a means to enhance returns while mitigating risk. This thesis aims to elucidate the importance of investment portfolios in guiding investment and financial decisions through discussions on risk, asset allocation, and return.

3. Risk Measurement

Risk measurement is the evaluation and estimation of the scope of the impact of risk and the evaluation and estimation of the time of occurrence of project risks, including the evaluation and estimation of the likelihood of the occurrence of project risks and the development of appropriate countermeasures and the control of risks after the risk assessment. Risk control is pivotal in investment, finance management, and the capitalist market. Looking at the broader context, the article titled "Empirical Analysis of Volatility Spillover Effect in World Leading Stock Markets and Asian Stock Markets" yields the following insights. The examination of volatility spillover in the article reveals that, over the sample period and amidst the stock market crash in China, volatility emanates from the United States and affects most Asian markets. Strikingly, this phenomenon only holds true during the U.S. financial crisis.

Consequently, it suggests that, during the U.S. financial crisis, portfolio investors in Asian stock markets could optimize diversification benefits by incorporating U.S. stocks into their portfolios. Conversely, volatility spillovers from China impact most Asian markets consistently throughout the sample period and during the U.S. financial crisis. However, no such pattern emerged during the Chinese stock market crash. This implies that, during the Chinese stock market downturn, portfolio investors in Asian stock markets could enhance diversification benefits by including Chinese stocks in their portfolios [5]. Risk measurement is particularly important in the current financial market environment due to world uncertainties, environmental issues, and demographic issues. Currently, different trading markets have different risk and portfolio management measures, and investors tend to maximize their assets through optimal portfolios in the context of turbulence. Traditional techniques like value-at-risk (VaR) and probability-of-default (POD) are still in use in the realm of risk assessment for optimal portfolios. Yet, they need to catch up when it comes to anticipating fundamental shifts in the financial market landscape. Recognizing this limitation, Mazin A.M. introduced a scenario optimization algorithm in 2014. This innovative approach introduces the concept of an investable structural portfolio embedded within a liquidity-adjusted value-at-risk (LVaR) framework. The objective is to pioneer sophisticated optimization techniques tailored for portfolio management, especially in the dynamic landscape of economic crises [6].

Different risk management and measurement can have a profound impact on a portfolio. Above, this paper is mainly from the macro perspective to introduce and analyze research in the general environment as well as a specific environment for managing and measuring risk. From the micro point of view, a company's investment portfolio will often also measure risk to take a rigorous analysis and prediction. In the market, the "betting agreement" is the most obvious product of the combination of risk and investment, risk measurement and management. A company's growth and development cannot be separated from investment management, so for the measurement of risk is both it is a deep impact on the investment. The "betting agreement" in the market is the combination of risk and investment, risk measurement and management of the most obvious product, a company's growth and development, inseparable from the investment management, so for the risk measurement, it is both the gas pedal of enterprise development, but if ignored or misjudged, often will be a company to the precursor of the downhill road.

In the previously discussed volatility context, Litterman and fellow researchers delved into the interplay between yield curve configuration and volatility back in 1991. A subsequent exploration by Galluccio and colleagues in 2006 introduced a novel risk measure that gauges the correlation between cross-sectional shape and market risk. Their approach involved comparing the risk metrics against the traditional cross-return covariance. Through an analysis that scrutinized the U.S. Treasury market, juxtaposing the performance of cross-shape and cross-yield risk metrics as indicators of market risk and tools for risk management, the findings indicate that a restricted set of cross shape factors provides a more nuanced understanding of interest rate risk compared to an equivalent number of cross yield factors. Through this discussion, it can better control and utilize risk metrics rationally so that risk metrics and management can help make optimal portfolio decisions [7].

Risk comprehension and management, often gauged through factors like volatility, are intricately examined in the empirical analysis of portfolio constraints presented by Abate and fellow scholars. The paper suggests that investors tailor their optimization models and constraints based on their specific objectives. The GMV model emerges as the optimal solution for those prioritizing limited risk. Alternatively, if the aim is absolute performance and efficiency, a GMV model incorporating tracking error volatility (min-tev) and lacking short-selling constraints (min-con) proves advantageous. However, the strategies' turnover rates must be noticed, and the investor must weigh transaction costs significantly in constraint selection. Take, for instance, the maxsh-nc2 model, exhibiting superior performance but is accompanied by high turnover and an inhibiting short position, making its adoption impractical. Striking a balance between absolute returns, efficiency, total risk, economic sustainability, diversification, and implementation simplicity leads to the recommendation of a GMV or MSR model. These models may not involve short selling and are subject to equal weighting or TEV limits. Opting for a GMV model aligns with concerns about absolute risk. In conclusion, constrained optimization models are a compelling alternative to conventional investment strategies, offering substantial advantages to discerning investors [8]. This theory, on the one hand, better provides a refined analytical solution for portfolios based on risk measures. On the other hand, it reinforces the importance of risk measures in investment portfolios and even in financial management, where risk often goes hand in hand with investment, and where grasping the risk is the key to the optimality of the portfolio.

4. Asset Allocation and Diversification

Portfolio management is the control of risk, how to avoid risk, the allocation of risk factors and reorganization is the second aspect of portfolio management is to achieve investment diversification, in the introduction, this paper mentioned that investors are often interested in more than two types of investment, and will be placed in different kinds of investment in different asset classifications, to achieve the reduction of risk and the return on assets, maximize the optimal portfolio, asset allocation of multiple and optimal is the main body of the portfolio, which often plays a decisive role in the size of the risk and the return on the size of the portfolio. Maximizing the optimal portfolio, diversification, and optimization of the asset allocation is the main body of the portfolio, which often plays a role in determining the level of risk and the level of return. Modern Portfolio Theory (MPT) focuses on constructing optimal portfolios to balance risk and return. Juan Franco-Laverde has pointed out that Modern Portfolio Theory has been applied to a combination of brands, markets, consumer segments, and campaigns to allocate marketing budgets but suffered from a lack of exponential or fixed rates of return, so he investigated a whole new area: price promotions and has developed a new approach to marketing. area: price promotions and provided an effective application of MPT in marketing. He explained that price promotions are done because the marketing manager seeks to maximize the return on marketing investment to create shareholder value. Finally, through the research in the FMCG sector, it was concluded that the marketing manager can identify the risks associated with deploying different levels of discounts in price promotions through MPT and then, through the MPT, optimize the mix of these activities to minimize risk and maximize return [9]. From this, it can be seen that the reallocation of commodities, etc., through MPT to achieve an optimal portfolio, placed in the area of investment portfolios, can facilitate asset management and diversification and that portfolios are like purchasing different types of commodities in the financial markets. Having an optimal portfolio can give you a unique advantage in the financial market, and the portfolio has a very important position in the financial market.

Of course, MPT can be utilized not only in areas such as branding markets but also in virtual currencies and the U.S. market. Bitcoin is an important part of the cryptocurrency system and is an investable product that plays a vital role in the economic system. Junchao Xia used MPT to conduct an in-depth study of Bitcoin to identify efficient frontier portfolios, diversify Bitcoin's risk by using some of the assets traded in the real market, and add Bitcoin to the real market portfolio. In the real market investor portfolio, one can have a more efficient portfolio with higher ratios [10]. By investigating the benefits of diversification and optimal portfolio allocations across different U.S. asset classes, the results based on PCA suggest that market integration, while increasing, is weak in the five major financial markets, and the benefits of diversification are assessed by applying mean-variance portfolio simulations and out-of-sample analyses. It is argued through MPT that investors can improve the risk-adjusted return of their portfolios by allocating resources to imperfectly correlated assets, thus making real estate, for example, a natural and ideal asset class to qualify for portfolio diversification, and finally, through empirical analyses, it is concluded that when different asset classes are included in a diversified portfolio, diversification benefits can be provided, and that in terms of maximizing the risk-return tradeoff aspect, a portfolio of all classes consistently outperforms five other portfolios with four asset classes [11]. From this, portfolio resource allocation and diversification can better satisfy the maximum return and the minimum risk in terms of investment management, and it has a crucial role in the operation and management of the whole financial market.

Resource allocation, the first focus on the allocation of different types of assets and risk analysis. Bitcoin joined the real market, it can play its unique advantages in portfolio diversification, not only the diversification of investment types, but also the diversification of the real and virtual, macro and micro, to optimize resource management, you can achieve the reduction of risk, is the next stage of the risk metric, but also to achieve the optimal investment portfolio, to make the right investment decision.

5. Conclusion

Mainly based on the risk and asset allocation and return to explore the significance of the portfolio for investment and financial decision-making. Research shows that risk and return an important part of the portfolio to minimize risk and maximize the return. The need to analyze and control the risk through the risk metrics how to carry out the risk metrics, it can use the LVAR framework, etc., the analysis. Secondly, through the analysis of resource allocation and diversification, research shows that the modern portfolio theory. However, it still has certain limitations, for resource allocation and management still has its unique advantages. This paper analyzes resource allocation and diversification. Research shows that the modern portfolio theory still has certain limitations, but for resource allocation and management or has its unique advantages, the minimum risk and maximum return first need to measure the risk. Secondly, the most important is the diversification of the portfolio management one is to seeks a different category of assets to reduce risk but seek The second most important is the diversification of the investment portfolio, which is to seek different types of assets to reduce the risk but also to seek the stability of assets with special attributes to improve the rate of return, the risk and return in the investment and financial decision-making. From this, an investment portfolio in the financial market, first of all, can resist the interference of short-term fluctuations in the market, and even in the specific environment of the economic crisis, it has many advantages, such as preservation of assets. Secondly, in the financial market, investors tend to take the high rate of return and the appreciation of the assets as the main goal. The portfolio can meet the investor’s needs, and the investor can be based on the theory of the MPT and their own investment objectives and risk tolerance. The portfolio can be used as a portfolio to meet the needs of the investors. According to the theory of MPT and their own investment objectives and risk tolerance ability, investors can adjust the structure and allocation structure of the portfolio to realize long-term stable investment returns. Therefore, as the main body of the financial market, the investment portfolio can provide the basis for investors to realize their own purpose. For the future of the portfolio, there will be new progress on the limitations of the MPT, which can be reflected in real life through more factors and data for the portfolio, and in the world's current environment, the portfolio will have a gradual trend of conservatism, will put the risk in the first place, and the pursuit of the minimization of the risk will be the goal of many investors and scholars. Second, with the development of the Internet and the gradual emergence of the tertiary sector, the portfolio can provide a basis for investors to achieve their own objectives. Secondly, with the Internet’s development and the tertiary industry's gradual emergence, virtual assets will gradually grow. How to integrate virtual assets and real assets, the development of an optimal portfolio is also one of the future trends of the portfolio. Finally, the importance of the portfolio for the financial market will be further strengthened with the gradual improvement of the financial market, as well as investor’s more and more rational investment, the rate of emotional investment to reduce the rate of us! As can be seen, the future of the financial market will be data for the king of the market; data is the root of everything, and investment portfolios will become more people's preferred option to get a high return in the financial market, etc. Therefore, the portfolio’s future is a development trend of the times, based on the specific international financial environment, and continues to figurative, actualization data of the future.