Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
What is short-term momentum? What are long-term reversals?
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Step 1
The term ‘momentum’ indicates the speed or velocity of a factor. In stock market, the momentum indicates the speed or the velocity of price changes of a tradable instrument. The concept of short-term momentum explains as a time series momentum strategy. That means, if there is a positive performance on the last week, then we prefer to buy the factor. Whereas, if there is a negative performance, then the factor shortened.
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