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You could hedge that risk by shorting the BABA stock at the same time you own YHOO. That way, you have no exposure to BABA.
by ucha 12y ago
You could hedge that risk by shorting the BABA stock at the same time you own YHOO. That way, you have no exposure to BABA.
- encoderer 12y agoEven if you're careful to short the same notional value, that's not a pairs trade that I would put on. It would open me to upside risk in BABA if YHOO does not perform as well. Correlations change all the time.