An application of TOPSIS and BWM for portfolio allocation

Abstract: This article introduces a comprehensive analysis of 20 leading companies, scrutinized through their financial metrics across various sectors. By deploying multi-criteria decision-making (MCDM) techniques, we aim to offer investors a clear and objective perspective on which companies stand out as the best investment options. Among the MCDM techniques, the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) is utilized, renowned for its efficiency in handling complex decision-making scenarios which is conducted by two clauses. 1) Implementing TOPSIS with assigning equal weights and same share to every chosen metrics as criteria and 2) employ BWM (Best Worst Method) to calculate these weights base on their significance and relevancy to the prosses of ranking. According to the Result gained from the computation, ranks 1 to 5 belong to the similar companies with both assumptions which are Ford Motor Co, BP plc, Tesla Inc, General Motors Co and Exxon Mobil Corp. The consistency in rankings across two different weighting assumptions highlights the robustness of the criteria used, ensuring stable and reliable outcomes. This enhances the credibility of the findings, making them more trustworthy and citable for those who seek reliable and robust methodologies for informed investment decisions.

How to cite this paper

 Amrei, S & Teymourian, A. (2024). An application of TOPSIS and BWM for portfolio allocation.Accounting, 10(4), 221-228.

Refrences

Aiello, G., Enea, M., Galante, G., & La Scalia, G. (2008). Clean Agent Selection Approached by Fuzzy TOPSIS Decision-Making Method. Fire Technology, 45(4), 405–418. https://doi.org/10.1007/s10694-008-0059-3
Chou, S.-Y., Chang, Y.-H., & Shen, C.-Y. (2008). A Fuzzy Simple Additive Weighting System under Group decision-making for Facility Location Selection with objective/subjective Attributes. European Journal of Operational Research, 189(1), 132–145. https://doi.org/10.1016/j.ejor.2007.05.006
Olson, D. L. (2004). Comparison of Weights in TOPSIS Models. Mathematical and Computer Modelling, 40(7-8), 721–727. https://doi.org/10.1016/j.mcm.2004.10.003
Rezaei, J. (2015). Best-worst multi-criteria decision-making method. Omega, 53, 49–57. https://doi.org/10.1016/j.omega.2014.11.009
Saaty, T. L. (2008). Decision making with the analytic hierarchy process. International journal of services sciences, 1(1), 83-98.
Toloie-Eshlaghy, A., & Homayonfar, M. (2011). MCDM methodologies and applications: a literature review from 1999 to 2009. Research Journal of International Studies, 21, 86-137.
Zavadskas, E. K., Mardani, A., Turskis, Z., Jusoh, A., & Nor, K. M. (2016). Development of TOPSIS Method to Solve Complicated Decision-Making Problems — An Overview on Developments from 2000 to 2015. International Journal of Information Technology & Decision Making, 15(03), 645–682. https://doi.org/10.1142/s0219622016300019

Journals

AC Volumes

Keywords

Authors

Countries

Accounting

An application of TOPSIS and BWM for portfolio allocation Pages 221-228 Download PDF

Add Reviews