Optimizing investment strategies: Harnessing the power of K-line complex networks

The K-line is one of the most widely recognized technical indicators, garnering significant attention from investors and serving as a prevalent reference point for stock market investments. This paper provides an innovative investment strategy rooted in a complex network that is shaped by the correlations among K-lines. Its monthly return reaches an impressive 5.4 % for constituents of CSI 300 index (one of the most popular China Securities Indexes), significantly outperforming the market. The analysis also reveals i) utilizing the K-lines network, a portfolio tracking the market can be effectively assembled with ten to twenty selected stocks and ii) portfolios constructed from low-centrality nodes surpass those constructed from high-centrality nodes. This paper provides a good solution to the costly management of portfolio construction.