  Portfolio design and optimization have been always an area of research that
has attracted a lot of attention from researchers from the finance domain.
Designing an optimum portfolio is a complex task since it involves accurate
forecasting of future stock returns and risks and making a suitable tradeoff
between them. This paper proposes a systematic approach to designing portfolios
using two algorithms, the critical line algorithm, and the hierarchical risk
parity algorithm on eight sectors of the Indian stock market. While the
portfolios are designed using the stock price data from Jan 1, 2016, to Dec 31,
2020, they are tested on the data from Jan 1, 2021, to Aug 26, 2021. The
backtesting results of the portfolios indicate while the performance of the CLA
algorithm is superior on the training data, the HRP algorithm has outperformed
the CLA algorithm on the test data.
