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All About Hedge Funds, Fully Revised Second Edition, 2nd Edition by Ezra Zask

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CHAPTER 16Equity Hedge Strategies

Equity strategies account for over one-third of all the assets managed by hedge funds, more than any other strategy. Hedge funds in this group trade a wide range of instruments—individual stocks, stock market indices, and equity derivatives—with the common feature that they are all equity based. The major strategies in this group are equity long/short, equity market neutral, and short-biased strategies.

A common feature of these strategies is their correlation to the stock market. Most of these strategies focus either on taking long positions in undervalued stocks, short positions in overvalued stocks, or a combination of the two. While hedge fund managers are adroit at taking steps to mitigate market risk by ...

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