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<p>As investors' awareness to invest in intelligent technologies and sustainable stocks, especially after facing high environmental pressures has increased. It has become imperative to understand the role of AI and green stocks in risk diversification. The current study investigates the effect of AI investment and green stocks on the asymmetric nature of risk, particularly evaluating their roles in affecting upside and downside risk. Pooled regression analysis is applied to prove the hypothesis using the panel data from AIM (Alternative investment market) London's listed companies from 2006 to 2022. Our results reported that both AI-related and green investments enormously enhance upside gains and reduce downside exposures. Robustness and endogeneity tests further proved that AI investment and green stocks mitigate upside risk by generating high returns and decrease downside risk by producing positive returns. On the other hand, the significant involvement of different factors in measuring risk also highlighted the robust contribution of risk determinants in forecasting both upside and downside risk. These results offer novel insights for using advanced tools to manage risk by providing valuable implications for investors searching for strategic stocks’ allocation and for policymakers intending to promote eco-friendly and innovation-driven financial resilience.</p>

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Mitigating upside gains and downside losses through AI investment and greenness of stocks

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年11月18日

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  • Beenish Shabbir,
  • Nyela Ashraf,
  • Jamila Khurshid,
  • Amina Tariq,
  • Lubna Jamil,
  • Zia Khalid

摘要

As investors' awareness to invest in intelligent technologies and sustainable stocks, especially after facing high environmental pressures has increased. It has become imperative to understand the role of AI and green stocks in risk diversification. The current study investigates the effect of AI investment and green stocks on the asymmetric nature of risk, particularly evaluating their roles in affecting upside and downside risk. Pooled regression analysis is applied to prove the hypothesis using the panel data from AIM (Alternative investment market) London's listed companies from 2006 to 2022. Our results reported that both AI-related and green investments enormously enhance upside gains and reduce downside exposures. Robustness and endogeneity tests further proved that AI investment and green stocks mitigate upside risk by generating high returns and decrease downside risk by producing positive returns. On the other hand, the significant involvement of different factors in measuring risk also highlighted the robust contribution of risk determinants in forecasting both upside and downside risk. These results offer novel insights for using advanced tools to manage risk by providing valuable implications for investors searching for strategic stocks’ allocation and for policymakers intending to promote eco-friendly and innovation-driven financial resilience.