What two solutions can help control losses in a relative strength study?

The focus on hedging and adding non-correlated assets is a sound strategy for controlling losses in a relative strength study. Hedging involves taking positions that can offset losses in your primary investments. This can help mitigate risk by providing a cushion against adverse market movements.

Adding non-correlated assets is critical in reducing overall portfolio risk as these assets often do not move in the same direction as the primary investments. When one asset category experiences losses, a non-correlated asset may remain stable or even gain value, helping to balance the overall portfolio performance. This diversification across different asset classes can significantly improve risk-adjusted returns and safeguard against market volatility, which is particularly relevant in a relative strength approach that compares the performance of various securities.