The risk-return profile in risk arbitrage is relatively asymmetric, as there is typically a far greater downside if the deal breaks, than there is upside if the deal is completed. Therefore, many...

The risk-return profile in risk arbitrage is relatively asymmetric, as there is typically a far greater downside if the deal breaks, than there is upside if the deal is completed. Therefore, many arbitrageurs tend to short comparable securities to protect their downside.