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This paper delves into the interdependent relationship between China and Pakistan and its implications for regional interests. It centers on China’s expanding economic clout in South Asia, primarily through its collaboration with Pakistan. Using the theoretical framework of “hedging,” the paper examines Pakistan’s strategy for balancing its connections with both China and the United States. It also explores the role of small powers in alliance politics and how China’s growing economic and military sway in Pakistan may affect Pakistan-U.S. relations. Ultimately, the paper contends that the United States can mitigate the perceived risk of a Pakistan-China partnership by considering Pakistan’s unique geopolitical position and its intricate association with India.

This paper looks into the case of Southeast Asian states’ policy of hedging toward the U.S.-China competition. It examines Indonesian and Vietnamese similar approach to their respective relations with China and the United States in a shifting regional landscape, despite the fact that the two Southeast states have different ideologies and political systems. The authors argue that the fear of abandonment and entrapment drives the Southeast Asian states’ policy preferences to ensure that the United States and China accommodate their interests. Historical baggage, especially the negative historical experiences of both countries with the United States and China, also inhibits the formation of military alliances with the superpowers. This paper compares the two influential Southeast Asian countries in detail and avoids “regional generalizations” about the countries in the region.

In this paper, we first present a review of statistical tools that can be used in asset management either to track financial indexes or to create synthetic ones. More precisely, we look at two important replication methods: the strong replication, where a portfolio of very liquid assets is created and the goal is to track an actual index with the portfolio, and weak replication, where a portfolio of very liquid assets is created and used to either replicate the statistical properties of an existing index, or to replicate the statistical properties of a custom asset. In addition, for weak replication, the target is not an index but a payoff, and the replication amounts to hedge the portfolio so it is as close as possible to the payoff at the end of each month. For strong replication, the main tools are predictive tools, so filtering techniques and regression play an important role. For weak replication, which is the main topic of this paper, in order to determine the target payoff, the investor has to find or choose the distribution function of the target index or custom index, as well as its dependence with other assets, and use a hedging technique. Therefore, the main tools for weak replication are modeling (estimation and goodness-of-fit) and optimal hedging. For example, an investor could wish to obtain Gaussian returns that are independent of some ETFs replicating the Nasdaq and S&P 500 indexes. In order to determine the dependence of the target and a given number of indexes, we introduce a new class of easily constructed models of conditional distributions called B-vines. We also propose to use a exible model to fit the distribution of the assets composing the portfolio and then hedge the portfolio in an optimal way. Examples are given to illustrate all the important steps required for the implementation of this new asset management methodology.