Diogo Filipe Da Conceicao Rolo @DiogoRolo: "𝗪𝗵𝗮𝘁 𝗜𝘀 𝗮 𝗟𝗼𝗻𝗴/𝗦𝗵𝗼𝗿𝘁 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆?..."

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𝗪𝗵𝗮𝘁 𝗜𝘀 𝗮 𝗟𝗼𝗻𝗴/𝗦𝗵𝗼𝗿𝘁 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆? (𝗔𝗻𝗱 𝗛𝗼𝘄 𝗜 𝗨𝘀𝗲𝗱 𝗜𝘁 𝘄𝗶𝘁𝗵 𝗘𝗔 𝗦𝗽𝗼𝗿𝘁𝘀 & 𝗧𝗧𝗪𝗢 🎮) Let’s talk about a classic hedge fund strategy that retail investors like us can also use: the long/short equity strategy. 🔍 𝑾𝒉𝒂𝒕 𝒊𝒔 𝒂 𝑳𝒐𝒏𝒈/𝑺𝒉𝒐𝒓𝒕 𝑺𝒕𝒓𝒂𝒕𝒆𝒈𝒚? It’s simple in concept: You go long (buy) on a stock you believe is undervalued or will go up. You go short (sell/borrow) a stock you believe is overvalued or will go down. By doing this, you're betting on the relative performance between the two. You’re not trying to guess if the market will go up or down — you’re isolating the difference in performance between two companies. 🎯 𝑹𝒆𝒂𝒍 𝑬𝒙𝒂𝒎𝒑𝒍𝒆: EA Sports (EA) vs Take-Two Interactive (TTWO) These two gaming giants often move in sync — similar industry, similar cycles, similar risk exposure. Historically, their stock prices have moved in a relatively tight range. 👉 But recently, TTWO had a massive rally, while EA remained flat or even dropped slightly. This creates a divergence — a possible trading opportunity. 💡 In this case, a long/short strategy would look like: Long EA (expecting it to catch up) Short TTWO (expecting a pullback or slower growth) Your profit doesn’t depend on the market going up or down — just on the price gap between the two stocks closing again. 📉 𝑵𝒐 𝑴𝒂𝒓𝒌𝒆𝒕 𝑹𝒊𝒔𝒌? 𝑳𝒆𝒕’𝒔 𝑻𝒂𝒍𝒌 𝑨𝒃𝒐𝒖𝒕 𝑩𝒆𝒕𝒂 This type of strategy often has very low market beta. That means it’s not strongly correlated with the overall market (like the S&P 500). Why? Because you’re hedged — your long and short positions offset each other in terms of market exposure. So when evaluating performance, we shouldn’t compare it to the stock market (like SPY returns). Instead, we compare it to a risk-free rate (like U.S. Treasury yields), because there’s minimal market risk. If your long/short strategy beats the risk-free rate consistently, that’s a solid return on a relatively low-risk setup. 📊 𝗦𝘂𝗺𝗺𝗮𝗿𝘆 𝗳𝗼𝗿 𝗕𝗲𝗴𝗶𝗻𝗻𝗲𝗿𝘀: A long/short trade isolates relative performance, not market direction. EA and TTWO are great candidates due to their correlated history and recent divergence. Evaluate returns against risk-free benchmarks — not the market — due to low beta. Always manage risk, monitor correlation changes, and be ready to exit if fundamentals shift. 💬 Have you ever tried a long/short setup? Drop your thoughts or questions below! #longshort $EA (Electronic Arts Inc) $TTWO (Take Two Interactive Software Inc)

2 Mentioned

Electronic Arts Inc

TTWO

Take Two Interactive Software Inc

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