Conditional variance of stock A = 10%
Conditional variance of stock b = 15%
Conditional Covariance between stock A &B = 9%
- If you want to hedge a 1$ long position in stock A, by a short position in stock B,what will be the dollar value of stock B?
- If you want to create a long only portfolio comprising of both stock A and stock B, what will be the individual weight of these two stocks in a portfolio