3 ‘Pair Trade’ Ideas From The Sohn Conference

In times of uncertain economic conditions and highly-volatile markets, pair trades can be one easy way to reduce trading risk. Pairs trades involve shorting one stock and going long another, typically correlated one. Industry experts at last week’s Sohn Investment Conference laid the foundation for pair trades involving Amazon.com (AMZN), General Motors (GM) and Royal Dutch Shell (RDS.A).

Trade 1 : Long Amazon.com (AMZN)/Short Alibaba (BABA)

Amazon AMZN stockAt the Sohn Conference, Social Capital’s Chamath Palihapitiya praised AMZN’s infrastructure, which he believes sets the company apart from tech giants Facebook (FB) and Twitter (TWTR). He also believes that AMZN’s retail customer base could more than double simply by growing 10% per year over the next 10 years.

Ultimately, Palihapitiya sees AMZN as a $3 trillion business by 2025.

On the other hand Kynikos’ Jim Chanos told CNBC at Sohn that he is still short Chinese e-commerce giant BABA. Chanos called China “the gift that keeps on giving on the short side.”

Chanos pitched his own Chinese e-commerce pair trade at a conference back in November, saying that he was going short BABA and long Chinese rival  JD.com (JD).  Since Chanos shared his original idea, BABA’s stock is down 4.6% and JD’s stock is down 22.3%.

Trade 2: Long General Motors (GM)/Short Tesla (TSLA)

Greenlight Capital’s David Einhorn was…

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