Optimal Portfolio of Chosen Stocks of the Prague Stock Exchange

The aim of the article is to assemble an optimal portfolio of chosen stocks of the Prague Stock Exchange. The Markowitz portfolio model is used. At rst, Pearson correlation coecients and covariance are calculated for the stocks ČEZ, KOMERČNÍ BANKA, TELEFÓNICA, UNIPETROL, NWR and PX Index in order to nd the dependence measure from 2003{ 2012. These values are presented in a correlation matrix and covariance matrix. Yield, risk and yield to risk ratios are calculated for stocks and PX Index. The dependence between yield and risk of stocks as well as yield and risk of portfolios are found. Stocks have di erent weights in a portfolio. A set of possible portfolios and a set of ecient portfolios are assembled for various combinations of ve-component stock portfolios. Based on that, an optimal portfolio is assembled. This article brings a method that can be used by investors and other subjects of the nancial market while deciding to what stocks to invest in.