The Relation between Risk and Return of Portfolio based on Standard Finance and Behavioral Finance

The relation between risk and return is a forever subject of finance. Risk is positive relation with return within the framework of standard finance theory, but negative relation within the framework of behavioral finance theory. To explain the conflicting relation within different theory framework, this paper proposed the model of perceived risk and perceived expected value based on self-confidence degree of private information. Then detailed discussed the mainly factors effecting them. This paper got the relation between risk and return. Only self-confidence degree of private information being greater than its critical value, risk is positive relation with return. Otherwise, risk is negative relation with return.