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In our previous article, we’ve discussed a couple of trading strategies exploiting arbitrage between similar stocks using stochastic optimal control methods. A major shortcoming of those approaches is that we restricted ourselves to constructing delta-neutral portfolios. Along with this, the ratio between the stocks in the portfolio is fixed at the start of the investment timeline. These assumptions make the problem simpler, as we only need to calculate the portfolio weights for the spread process as a whole. But, this approach, as [Liu and Timmermann (2013)] discusses, is suboptimal. In this article, we will be discussing a generalized approach that allows the weights corresponding to the stocks in the portfolio to move freely, along with looking at the shortcomings of the previous approaches.