risk arbitrage

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risk arbitrage

n.
The simultaneous purchase and sale of assets that are potentially but not necessarily equivalent in order to exploit a discrepancy in price.

risk arbitrageur n.
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Noun1.risk arbitrage - arbitrage involving risk; as in the simultaneous purchase of stock in a target company and sale of stock in its potential acquirer; if the takeover fails the arbitrageur may lose a great deal of money
arbitrage - a kind of hedged investment meant to capture slight differences in price; when there is a difference in the price of something on two different markets the arbitrageur simultaneously buys at the lower price and sells at the higher price
References in periodicals archive ?
In the case of CDS equity arbitrage, Kapadia and Pu (2012) note that an imperfect hedge caused by an incorrect or out of date hedge ratio leaves the arbitrageur with an unhedged position in the firm.
Janus' unconstrained fund uses strategies that include "a number of equity arbitrage types of situations," which according to Gross are non-volatile and can produce 4% to 5% returns.
In the one year ended August 8, the best performing fund in the category was Kotak Equity Arbitrage Fund, with returns of 10.03%.