paaritrading
Paaritrading, also known as pair trading or statistical arbitrage, is a trading strategy that seeks to profit from the historical price relationship between two or more financial instruments. The core idea is to identify two assets that have a strong correlation in their price movements. When this correlation temporarily breaks down, traders enter opposing positions on the two assets, betting that the relationship will revert to its historical mean.
For instance, a common pair might be two stocks within the same industry, such as two major
Key to successful paaritrading is identifying robust cointegration, a statistical property indicating that the price series