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Pair trading

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by , 06-10-2024 at 11:26 AM (89 Views)
Currently, there are a huge number of trading strategies for every taste. All these strategies are aimed at making a profit. But making a profit is in one way or another connected with the risks - the greater the expected profit, the higher the risks. A logical question arises: is it possible to reduce trading risks to a minimum, while receiving small but stable profits? These conditions are met by pair trading.

Pair trading is a variery of statistical arbitrage first proposed by Jerry Bamberger in the 1980s. This trading strategy is market neutral, allowing traders to profit in almost any market condition. Pair trading is based on the assumption that the characteristics of interrelated financial instruments will return to their historical averages after a temporary deviation.


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