Long-short Equity Strategy is by a hedge fund. In this strategy, half of the capital is deployed to take a long position in a set of undervalued securities and another half to take short positions in a set of overvalued securities.
The rationale is that the long positions are expected to increase in value whereas short positions are expected to decrease in value.A portfolio constructed in this fashion helps to protect from losses during the market crash. Therefore, this strategy is known as market-neutral strategy.
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