Convergence trading
In economics, there was a widely accepted theory named the Law of one price, whereby the same good should be sold at the same prices, if you remove the transportation, for-ex and other administrative and misc costs. The popular Big Mac index is a popular illustration of this concept although its credibility is also disputed https://en.wikipedia.org/wiki/Law_of_one_price https://en.wikipedia.org/wiki/Big_Mac_Index is a so called popular Surprisingly, there is little documentation about convergence trades in academia finance, despite sharing common roots. Economics explaining why money functions and how it flows, and finance tracking its actual movements and on the practical applications. My curiosity is piqued when I was made aware of HSBC HK/ HSBC UK, TJZX China A and TJZX SG, and this recent discovery, HKL USD and HKL GBP. Theoretically, in efficient financial markets, the law of one price should hold, and triangular arbitrage should eliminate pricing anomaly. In ac