Long / Short

I noticed that BIDU, one of the stronger stocks in the chinese market has outperformed FXI consistently both with upside and downside market moves. In other words, when the market is in a strong downward trend (as it is now), BIDU has gone down less than FXI. When the market was appreciating BIDU outperformed FXI.

Assuming this relationship holds on the near term, speculative play: long BIDU, short FXI. Should yield return in an upward or downward trending market.


1 Comment

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One response to “Long / Short

  1. bbc

    There is interesting, in this case, you don’t even need hedge ratio. Maybe just balance the dollar amount of the two stock?

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