Financial Analysis - Build a ChatGPT Pairs Trading Bot - Returns, Log Returns, Cumulative Returns

The lecture covers the concepts of returns, including simple, gross, and log returns, and their importance in evaluating trading strategies. It explains how to calculate these returns and discusses the mathematical convenience of log returns. The lecture also touches on baseline values for returns and their implications in coding, emphasizing the importance of understanding these concepts for financial analysis.

What mistake did the code suggestion make regarding the computation of returns?

Why is the log return considered more convenient for calculations?

How can cumulative returns be computed using log returns?

What is the baseline value for log returns and why is it significant?