question archive You believe that the Malaysian stock market is expected to underperform the Hong Kong stock market
Subject:FinancePrice:2.86 Bought3
You believe that the Malaysian stock market is expected to underperform the Hong Kong stock market. You would like to use FBMKLCI futures and Hang Seng Index Futures to make profit. What is the best strategy to make profit by using the two index futures? Name the strategy.
If I expect that the Malaysian stock market is underperforming the Hong Kong stock market then I will be trying to go long on the Malaysian future whereas I will be trying to go short on the Hong Kong futures.
I will be using the long short strategy in which I will be trying to go long on the future is in which I am trying to maximize my rate of return and it is Malaysian stock futures in which I am trying to maximize my rate of return, as I believe that it is undervalued significantly and it will be maximizing my rate of return, so I will be trying to go long on Malaysian futures and I will be trying to hold it till the prescribed time period and I will be exercising this futures in order to maximize my rate of return.
It will also be prudent to go short on Hang Seng futures because it is a part of long short strategy as I will be trying to maximize the probability of earning when the Hang Seng stock index will be correcting, so I will be trying to play through both the long Malaysian futures and short hang Seng futures which will maximize my rate of return.
This will be leading to to outflow of cash and obligately contract but I will be trying to maximize my rate of return on both the positions as this is like a twin exposure on a similar direction which will help me in order to maximize my rate of return.