Long Short Portfolio

Long-short portfolio strategies aim to generate profits by simultaneously holding long positions in assets expected to appreciate and short positions in assets expected to depreciate. Current research focuses on leveraging machine learning, particularly deep learning architectures like autoencoders, LSTMs, and generative AI models (like large language models), to predict asset price movements and construct optimal portfolios. These models are being applied to various markets (stocks, forex) and time horizons, with a focus on improving Sharpe ratios and risk management through techniques like cointegration analysis and model-free hedging. The findings demonstrate the potential of AI-driven approaches to enhance investment performance and refine risk mitigation strategies.