Financial Analysis - Build a ChatGPT Pairs Trading Bot - Long-Only Strategy (Code)

The lecture explores the performance of a long only strategy compared to short selling. It demonstrates that while short selling theoretically increases returns, the long only strategy often performs better in practice. The video evaluates various asset pairs, showing that the long only strategy reduces losses and sometimes outperforms buy and hold. The analysis of Coca-Cola and Pepsi reveals a significant performance improvement with the long only strategy. The lecture concludes by discussing the discrepancy between theoretical calculations and real-world returns, emphasizing the importance of limiting exposure to individual assets.

In what way does the speaker believe the long only strategy performs better overall?

What does the speaker suggest about the theoretical calculations in portfolio optimization?

What constraints might be applied to asset exposure in a portfolio according to the lecture?