Hi, Im looking to get an equation I can input values into.

Im using a financial product where I put in 100$ of asset A. The protocol then lends me 200$ of asset B, and sells a quarter of it into asset A.

So I end up with 150$ each of asset A and B, and a debt of 200$ worth of asset B.

I then go and purchase some derivative hedge contracts for the 2 assets. Those are bets on whether it will go up or down. For example if I bought a short of 100$ of asset A, for every 1$ it went down I would make 1$, and I could do the inverse.

The second part is that asset A and B always have equal $ amounts. Therefore if asset A goes up in value, then some of it will be sold into asset B. For example if the amount of asset A I have became worth 150$, then roughly 25$ of it would be sold into asset B, and I would have 175$ of asset A, and 175$ of asset B.

Through the ownership of these 2 assets and the derivatives I want to be price neutral, I want to be unaffected by the rise or fall of the prices. I want an equation where I can figure out how many of the derivative hedge contracts I need to purchase based on the prices and amount of these 2 assets at any point. My intention is to rebalance my position in these hedge prices a few times a day, or to use a little bot to do it for me.

What I tried, and which hasnt worked was to short (bet on it going down) for the whole value of asset A (150$ in my original example), and long (bet on it going up) for the amount of asset B I sold into asset A (50$, or a quarter of my initial borrow in the above example). The idea with that is I own 150$ of asset A, so I make money if it goes up, so I would buy the opposite and make money in case it goes down, to be neutral. With asset B 75% of the amount I borrowed is in the same asset, therefor I didnt think I needed to hedge that position, so I just long the 25% of it that I convert into asset A. However my tests with that havent worked, even after pretty small price changes, so Im off somewhere.

Im looking for a formula where I can put in the amount of asset A, and the price, and the amount of asset b, and its price, and determine the amount of hedge derivatives I should be buying to stay neutral.

You will come across some more complicated concepts in those, which I have glossed over to keep it easy.