      Because stocks are positively and negatively correlated, it ispossible to capitalize on a piece of news on both the long and short side.For example, a while back there was a strong positive correlation betweenDELL and CPQ, and a negative correlation existed between GTW and both DELLand CPQ. Therefore, when a piece of bullish news came out on DELL, it waspossible to short GTW and go long CPQ at the same time. In thiscircumstance, GTW would lose ground, given the existing fears that CPQ andDELL were crushing GTW in the marketplace. Since DELL and CPQ were bothsuch strong companies, anything that was bullish for DELL was interpretedby market participants as bullish for CPQ, and vice versa. By going longand short two closely related stocks in the same sector, the riskassociated with bearish news that affects the entire sector is mitigated.For example, the announcement of a flawed Intel chip would cause allcomputer manufacturers to decline in price. If a trader is long CPQ andshort DELL, the impact of the Intel news will be "balanced" by the trader'sposition.