The Performances of Different Trading Strategy for Hegde Funds Based on Data Analysis

Abstract

The investment strategies of hedge funds are diversified. In the face of changing market conditions, it remains unclear whether the hedging strategy will be affected by external factors within a specific period, resulting in abnormal performance or not. On this basis, we investigate the performance of three well-known hedge funds trades (market neutral trade, merger arbitrage and momentum) in terms of data during January to March in 2022. Meanwhile, we explore the relevance between the success and failure of the trade and the strategy, and whether there are other factors that affect the effectiveness of the strategy in the trade. According to the analysis, even in the face of sudden changes in the international situation (e.g., the Russian Ukrainian war), the fluctuation of stock price is not as intense as expected. These results shed light on the effectiveness of hedging strategies is different for different portfolios.