On page 14 of Chapter 6 where the short blurb explains how perfect correlation between two assets can allow for the creation of a risk-free portfolio, it mentions if the correlation of the two assets are perfectly positive then we would take a negative holding of asset B and a positive holding of asset A. But does it matter which of the assets we have a negative and positive holding respectively? i.e. could we make a risk-free portfolio by having a negative holding of A and a positive holding B (but in different proportions to if we had the other way around like in the statement above). Also - by "negative holding" does it mean short-selling or buying a put?
When two risky assets are perfectly positively correlated there will be only one combination which will result in a risk-free return because the efficient frontier collapses to a straight line. Should be fairly straightforward to build a demo in Excel to confirm this. In this setting there are no puts, the negative holding is achieved by short-selling. Hope that helps.
