Portfolio theory helps manage investments by combining different assets to reduce risks and increase returns. By using the Markowitz model and the index model, researchers studied US stock data to see how well these models perform in creating investment portfolios. They found that the returns and risk-adjusted returns (Sharpe ratio) of portfolios built using the Markowitz model matched those of the index model. This suggests that investors can use these models to construct portfolios that perform well in the US market.