Financial Analysis - Build a ChatGPT Pairs Trading Bot - Correcting How We Measure Strategy Performance

The video tutorial discusses errors in calculating portfolio returns using ChatGPT. It highlights the incorrect use of percentage returns and suggests using gross or log returns for accurate cumulative calculations. ChatGPT's response is analyzed, pointing out its partial correctness. The tutorial provides code examples for computing log returns and suggests more numerically stable alternatives. It concludes with a summary of corrections and emphasizes the importance of using the right methods for return calculations.

What is the main issue with computing total returns as mentioned in the text?

What are the two methods suggested for computing cumulative returns?

Explain the difference between using percent returns and log returns for calculating cumulative returns.

Why is it important to remain consistent when using returns in calculations?

How does the logarithmic return relate to the final price and initial price?

What mistake did the teacher identify regarding the syntax in the code?

What is the significance of using the NP dot log function in the context of portfolio returns?