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Trading Strategy–Purchasing Power Parity
- 1 Dublin School
- 2 WLSA shanghai academy
- 3 Boston University
- 4 Seton Catholic Central School
- 5 Beijing Bayi school
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Abstract
This paper mainly focuses on one Strategy–Purchasing Power Parity. PPP is a value strategy that shows whether a currency is overvalued or undervalued based on the market prices of a specific good in different nations, and investors believe that the currency will get back to its fair value in the long run so that they would be long the undervalued currencies, and vice versa. This strategy is one of the two presentations from the class presentations. Furthermore, it was well developed in its modern form by Gustav Cassel in his article Abnormal Deviations in International Exchanges.
Keywords
price levels between countries, absolute PPP (APPP), relative PPP (RPPP), trading strategy, hedging, backtest
[1]. CMC Markets. (2022) A guide to forex trading strategies. 5 Forex Trading Strategies with Examples | CMC Markets. (n.d.).https://www.cmcmarkets.com/en/learn-forex/forex-trading-strategies.
[2]. Yahoo Finance. Exchange Rate https://finance.yahoo.com.
[3]. The OECD (2022 ) Monthly Interest Rate short-term interest rates - OECD data. https://data.oecd.org/interest/short-term-interest-rates.htm.
[4]. The OECD. (2022) Inflation rates - short-term interest rates - OECD data. (n.d.) https://data.oecd.org/interest/short-term-interest-rates.htm.
Cite this article
Shen,H.;Zheng,X.;Yin,M.;Peng,X.;Liu,Z. (2023). Trading Strategy–Purchasing Power Parity. Advances in Economics, Management and Political Sciences,15,68-76.
Data availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies
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