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Standard Deviation In The Business World Literature Essay

Standard Deviation in the Business World Literature Review In order to demonstrate the applicable uses of standard deviation and other measures of central tendency to the study of business-based economics, it is informative to study the empirical research conducted by researchers with expert knowledge in the field. To that end, an article titled "A Robust Mean Absolute Deviation Model for Portfolio Optimization," which was jointly authored by Korean researchers Yongma Moon and Tao Yao, has been chosen for further review. Published in the scholarly journal Computers and Operations Research in 2011, this comprehensive combination of literature review and statistical modelling is intended to test the efficacy of applying standard deviation to the process of portfolio optimization. In this paper, the authors develop a robust model for portfolio optimization based on their own...

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The purpose of this research is to expand the base of empirical knowledge on a phenomenon known as 'parameter uncertainty' by exerting increased control over the potential impact of estimation errors on optimal portfolio strategy performance. The authors construct a statistical model premised on robust mean absolute deviation (RMAD), which precipitates the development of a linear program and reduces the inherent computational complexity of currently implemented robust portfolio optimization techniques. Throughout the paper, Moon and Yao rigorously test their robust strategies by applying them to real market data, while engaging in an objective discussion on the performance level exhibited by a robust optimization model which is empirically founded on financial elasticity, standard deviation, and market conditions including…

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Moon, Y., & Yao, T. (2011). A robust mean absolute deviation model for portfolio optimization. Computers & Operations Research, 38(9), 1251-1258.
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