If have to hedge risk for AUD/USD long position. Meaning correct answer is to buy inversely correlated currency pair which are USD/CHF and USD/CAD. why the heck correct answer is USD/CAD and not USD/CHF?
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At most times, the best of the three to hedge AUD/USD (long) would be NZD/USD (short).
It’s because both AUD and CAD are mining economies. Their relative currencies are in competition.
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I reviewed entire thing. My guess is it has to do something with pip to value ratio I think AUD/CAD has the either the highest or lowest pip to value ratio which will in turn effect the amount of risk being hedge and spread.