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With below information justify below statement for a portfolio with two stock A and B where $10000 Invested in A and $5000 short on B

With below information justify below statement for a portfolio with two stock A and B where $10000

Invested in A and $5000 short on B

Statement: If stocks are positively correlated in portfolio then taking opposite position in the two assets has the effect of offsetting the fluctuation.

Stock Mean STD

A 12% 24%

B 15% 30%

Correlation coefficient = 0.33

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