Authors : Jiaqi Wang

Volume/Issue : Volume 10 - 2025, Issue 10 - October

Google Scholar : https://tinyurl.com/mt7734yv

Scribd : https://tinyurl.com/axfery29

DOI : https://doi.org/10.38124/ijisrt/25oct1329

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Abstract : Dynamic portfolio optimization remains one of the most challenging problems in quantitative finance due to the non-stationary nature of financial markets, complex asset correlations, and the presence of transaction costs. Traditional portfolio management approaches, including Modern Portfolio Theory and mean-variance optimization, often rely on restrictive assumptions that fail to capture market dynamics effectively. This paper investigates the application of Deep Reinforcement Learning techniques to dynamic portfolio optimization, exploring how intelligent agents can learn optimal allocation strategies through continuous interaction with financial environments. We systematically review recent advances in DRL-based portfolio management, examining various algorithmic frameworks including convolutional neural network architectures and actor-critic methods. Our methodology section presents a comprehensive DRL framework employing the Ensemble of Identical Independent Evaluators topology with convolutional layers for feature extraction from historical price data. Through simulated trading experiments, we demonstrate that DRL-based approaches can adapt to changing market conditions while maintaining reasonable trading frequencies that minimize transaction costs. The results indicate that DRL agents achieve superior risk-adjusted returns compared to traditional benchmarks while exhibiting disciplined trading behavior with manageable transaction volumes. This research contributes to the growing body of literature on artificial intelligence applications in finance and provides practical insights for developing adaptive portfolio management systems.

Keywords : Deep Reinforcement Learning, Portfolio Optimization, Convolutional Neural Networks, Transaction Costs, Algorithmic Trading, Financial Machine Learning.

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