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Market neutral and hedging

A cluster on building cleaner market-neutral trades, testing whether hedges remove the risk you think they remove, and deciding when event-style markets and perps belong in the same structure.

Reviewed by Alphora Research

Updated June 30, 2026

Many trades get called market neutral long before they are actually neutral. In practice, neutrality depends on what risk you are trying to remove, how the hedge ratio was chosen, how the two legs behave under stress, and whether the relationship survives the regime you are trading.

For Alphora-style research, a hedge is not just a second line item. It is a testable claim about what exposure should disappear, what residual edge should remain, and how execution, liquidity, expiry, and signal format can break that claim. This cluster turns that broad idea into separate questions about beta removal, hedge quality, mismatch, and event-market plus perp workflows.

Questions in this cluster

Each page answers a narrower search-shaped question while staying linked to the broader research theme.

Strategy intuition

definition

What is beta neutrality?

Learn what is beta neutrality, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

Why does beta neutrality matter in systematic trading?

Learn why does beta neutrality matter in systematic trading, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

What are hedge ratios?

Learn what are hedge ratios, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

Why do hedge ratios matter in systematic trading?

Learn why do hedge ratios matter in systematic trading, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

What is residual exposure?

Learn what is residual exposure, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

Why does residual exposure matter in systematic trading?

Learn why does residual exposure matter in systematic trading, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

What are basis hedges?

Learn what are basis hedges, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

Why do basis hedges matter in systematic trading?

Learn why do basis hedges matter in systematic trading, why it matters in market neutral and hedging, and how it connects to a practical systematic trading workflow.

Strategy intuition

definition

What makes a trade market neutral in practice?

Learn what traders really mean by market neutral, why dollar neutrality is not enough on its own, and how Alphora-style research checks whether returns are coming from the spread instead of the tape.

Risk management

research

How do you know whether a hedge actually works?

Learn how to evaluate hedge quality with residual beta, shock tests, and paper-trading evidence instead of relying on intuition or a cleaner-looking chart.

Use cases

implementation

When should you hedge an event market with a perp?

Learn when a perp is a useful directional offset for an event-style market, and when payoff mismatch makes the hedge worse than the original risk.

Portfolio construction

implementation

How do you remove beta from a crypto trade idea?

Learn practical beta-removal choices for crypto trades, from benchmark selection to hedge-ratio estimation and refresh rules.

Risk management

research

What causes hedge mismatch in a market-neutral trade?

Learn the main reasons a hedge misses the exposure it was supposed to offset, and how to spot mismatch before it turns into unexplained PnL.

Portfolio construction

implementation

How should you size the hedge leg in a pair trade?

Learn how traders size the offsetting leg of a pair trade and why hedge sizing is really a risk-budget decision.

Risk management

research

Why can a market-neutral trade still lose on correlation breakdown?

Learn why residual losses in market-neutral trades often come from changing relationships rather than from a failure to put one leg long and one leg short.

Use cases

implementation

How do you pair an event-style market with a perp without over-hedging?

Learn a practical way to combine event-style markets and perps so the perp offsets broad tape moves without overwhelming the event thesis.