Core Insights - The report proposes a dynamic allocation strategy based on the value range of converging stocks in four major sectors: technology, gold, pharmaceuticals, and consumer goods, validated through empirical analysis for risk control and return enhancement [3][9]. - From September 1, 2024, to June 11, 2025, the ETF portfolio based on converging stocks achieved a return of 29.94%, a Sharpe ratio of 2.34, and a maximum drawdown of 5.17%, significantly outperforming an equal-weighted ETF allocation strategy [3][40]. Group 1: Technology Sector - The converging stock for the technology sector is Jinghe Integrated, utilizing a 3.6x PS valuation model, with a Sharpe ratio of 1.93 during the backtest period, effectively controlling risk and outperforming the Sci-Tech 50 Index [3][9][14]. - The strategy based on Jinghe Integrated yielded a return of 48.49% from September 1, 2024, to June 11, 2025, compared to the Sci-Tech 50 Index's return of 41.31% [14][15]. Group 2: Gold Sector - The converging stock for the gold sector is Chifeng Gold, based on a 16.2x PE valuation model, with a Sharpe ratio of 2.38. Although the strategy did not outperform the index, it significantly reduced drawdown risk [3][23][24]. - The strategy effectively controlled drawdown during a strong performance period for gold stocks, despite not beating the index [24]. Group 3: Pharmaceutical Sector - The converging stock for the pharmaceutical sector is East China Pharmaceutical, using a 16.3x PE valuation model, achieving a Sharpe ratio of 1.83, effectively controlling drawdown while enhancing returns [3][31]. - The strategy based on East China Pharmaceutical managed to improve returns during a period of significant volatility in the innovative drug index [31]. Group 4: Consumer Sector - The converging stock for the consumer sector is Kweichow Moutai, with a bottom valuation of approximately 18.5x PE based on 2024 expected net profit, achieving a Sharpe ratio of 1.7 [3][35]. - The strategy effectively controlled drawdown during a volatile period for the consumer sector [35]. Group 5: Equal-Weighted Strategy - The equal-weighted ETF portfolio from September 1, 2024, to June 11, 2025, yielded a return of 29.31%, with a Sharpe ratio of 1.3 and a maximum drawdown of 15.48% [39]. - The converging stock strategy yielded a similar return of 29.94% but with a significantly improved Sharpe ratio of 2.34 and a reduced maximum drawdown of 5.17%, indicating effective risk control [40].