Investment Strategy Based on the Fama-French Three-Factor Model and Risk Parity in the A-Share Market

Changes in the global landscape, including epidemics and wars, have led to dramatic shifts in the global economic situation. In the current domestic economic situation, economic development is facing a series of challenges and opportunities. Therefore, as an investment, an appropriate strategy should be adopted to balance the benefits and risks. This paper aims to verify the feasibility of an investment strategy that can balance risk and return in the A-share market. Previous academic research has rarely explored and validated this method for the A-share market, thus presenting an opportunity to address this gap and inspire further research. This paper combines the multi-factor model with the principle of risk parity, and verifies and analyzes it mainly in the A-share market. This paper will validate this investment strategy using past data and then illustrate that this investment strategy has certain feasibility and practical value in the A-share market.