Pair Trading

Linear regression

Examining linearity between two stocks – linear regression and interpreting results.

Read: Relationship between a pair of stocks


How do you conclude that a pair of stocks move together?

Read: Bank Nifty vs. HDFC Bank and ICICI Bank

Finding Pairs

Correlation, spreads and co-integration.

Read: Finding Pairs to Trade

Hedge ratio

Hedge ratios, spreads and significance.

Read: The Bank Nifty – ICICI Bank Pair

A pair trading strategy

A simple trading strategy: buy the spread if it is one standard deviation below the average and sell the spread if its is one standard deviation above the average.

Read: Backtesting a Pair Trading Strategy

Pair trading scanner

A ready-made list of pairs to trade. Refreshed once an hour.

Read: The Pair Trading Tip-Sheet



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