You expect Volvo stock to have a 20% return next year and a 30% volatility. You have 25,000 SEK to invest, but plan to invest a total of 50,000 SEK in Volvo, raising the additional 25,000 SEK by shorting either Ericsson or H&M stock. Both Ericsson or H&M stock have an expected return of 10% and a volatility of 20%. If Ericsson has a correlation of +0.5 with Volvo, and H&M has a correlation of 0.50 with Volvo. (Calculate without EXCEL)

i) Which stock should you short? ii) What is the expected return of each strategy?