Design Long-Short Strategy

In: Business and Management

Submitted By Chris4455
Words 3200
Pages 13
Design Long-Short Strategy

Table of Contents

I. Long-Short Strategy………………………………………………………..……..2

II. Long Position in AHY.AX and Short Position in WOW.AX…………………2

III. Daily Return in WOW.AX and AYH.AX……………………………………..…..3

IV. Short position in WOW.AX and AYH.AX………………………………..……..4

V. Invest and short sell ASX 200 index…………………………...……………….5

VI. Long – Short Portfolio…………………………………………………………… 6 * Portfolio1………………………………………………………………….…………6 * Portfolio 2……………………………………………………………………………6 * Portfolio 3……………………………………………………………………………7

VII. Long – Short funds in Australian fund management companies…………8

VIII. Cost and Requirement of short selling…………………………………...……8

IX. Exhibit………………………………………………………………………………..9

X. Reference…………………………………………………………………….…….10

I. Long-Short Strategy
Long-short strategy is a hedge fund strategy in investment, which involves the long positon in a stock and short position in another stock. A Long position simply means buying an undervalued stock in a lower price that are expected to get an increasing value in it. On the other hand, short position in a stock means borrowing some shares from brokers who also borrows the share from institutional companies, then sell it immediately in the market and buy those stocks back at a lower price later. The profit is the different between the initial selling price and the later price when buying it back. The ideal situation for the long-short strategy is the long position in a stock will increase and the short position in another stock will decrease. If this happened, the position will become equal size and the hedge is the optimal choice.

II. Long Position in AHY.AX and Short Position in WOW.AX
According to ASX200 list, Woolworth and Asaleo Care belongs to the same industry sector called Consumer Staple, which are used to design the…...

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