Pair Trading

Linear regression

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

Read: Relationship between a pair of stocks

Co-integration

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

 
 

Questions?

WhatsApp us at +91-80-2665-0232

If you enjoyed this post, please consider registering to get a weekly digest of our articles.
Get in touch with Shyam for advice on mutual funds. You can either WhatsApp him or call him at 080-2665-0232. He is an AMFI registered IFA who can advice you on Franklin, Blackrock, IDBI, Mirae, HDFC, ICICI Pru, UTI, Sundaram, Reliance, Religare, Peerless, Tata and Birla Sun Life funds.