Hedge fund strategies: Long short 1 | Finance & Capital Markets | Khan Academy

Feb. 2, 2021

Here is the link. 

Setting up a simple long-short hedge (assuming the companies have similar beta or correlation with market). Created by Sal Khan.

Buy one share of company B, and short two shares of company A. A is $5/ share, B is $10/ share.

For simplicity, long position in B $10

Short position in A $10

B outperforms A, or A outperforms B.

Case 1: Two stocks go up

Case 2: Two stocks go down