 |
 Technical Pro MRS4 Active Passive Studio Monitors Pair Computer TV Speakers $66.99 Time Remaining: 14d 21h 5m Buy It Now for only: $66.99 |
 Technical Pro MRS8 Active Passive Studio Monitors Pair Computer TV Speakers $114.00 Time Remaining: 25d 21h 5m Buy It Now for only: $114.00 |
 TECHNICAL PRO MRS 04 4 PAIR ACTIVE POWERED STUDIO MONITORS $69.95 Time Remaining: 10d 16h 7m Buy It Now for only: $69.95 |
 Technical Pro MRS5 Active Passive Studio Monitors Pair Computer TV Speakers $73.99 Time Remaining: 17d 21h 5m Buy It Now for only: $73.99 |
 Pair Technical Pro VRTX215 Dual 15 7 way 3600 Watts Carpeted Speaker Cabinets $399.95 Time Remaining: 17d 16h 4m Buy It Now for only: $399.95 |
 Technical Pro MRS43U 4 50 Watt 2 Way Powered Active Studio Monitors Pair $69.95 Time Remaining: 17d 15h 59m Buy It Now for only: $69.95 |
 Pair Technical Pro VRTX10 10 5 Way 1600 Watts Carpeted Speaker Cabinet VRTX 10 $159.95 Time Remaining: 17d 15h 57m Buy It Now for only: $159.95 |
 New Technical Pro SPH6 140 W Book Shelf Studio Monitors Passive Speakers Pair $66.50 Time Remaining: 27d 23h 47m Buy It Now for only: $66.50 |
 Pair Of Technical Pro BTB44R 1500 Watt 4 Titanium Bullet Tweeters $74.95 Time Remaining: 23d 16h 15m Buy It Now for only: $74.95 |
 Pair Technical Pro MRS53U 5 Active USB Studio Monitors $79.95 Time Remaining: 1d 14h 1m Buy It Now for only: $79.95 |
 Pair 2 Ortofon QBert Stylus and Pair 2 Technic Slip Mats NEW Fast Shipping $85.00 Time Remaining: 8d 23h 19m Buy It Now for only: $85.00 |
 New Technical Pro MRS5 Active Passive 5 Studio Monitors Speakers Pair $78.20 Time Remaining: 24d 17h 25m Buy It Now for only: $78.20 |
 Technical Pro MRS63U Studio Monitors Pair w USB SD Computer TV Speakers $105.00 Time Remaining: 6d 21h 20m Buy It Now for only: $105.00 |
 Technical Pro MRS6 Active and Passive Studio Monitors Pair Black $82.81 Time Remaining: 6d 17h 59m Buy It Now for only: $82.81 |
 New Technical Pro SPH5 120W Book Shelf Passive Speakers Pair Black $57.50 Time Remaining: 27d 23h 47m Buy It Now for only: $57.50 |
 Technical Pro MRS963U 6 70 Watt Powered Active Studio Monitors w USB Pair $89.95 Time Remaining: 23d 16h 51m Buy It Now for only: $89.95 |
 Technical Pro MRS8 Active and Passive Studio Monitors Pair Black $107.14 Time Remaining: 2d 18h 29m Buy It Now for only: $107.14 |
 Pair Technical Pro MRS53U 5 Active Monitors+USB Stick $90.95 Time Remaining: 1d 14h Buy It Now for only: $90.95 |
Pair Technical
Pairs Trading Strategy and Statistical Arbitrage
Pairs trading strategy is a market neutral strategy which enables traders to profit from virtually any market condition; uptrend, downtrend or sidewise movement. Although introduced in early 1980’s the strategy became popular among retail traders only after the introduction of online trading though sophisticated trading systems. Opportunities of pairs trading usually last for only a short-period of time thus quick response to market movements is required, which can only be achieved by high degree of automation.
The first and most important step in pairs trading strategy is to find pairs. Pairs are trading instruments (stocks, options, futures, currencies, bonds, etc.) which show great correlation; that is the price of one move in same direction of the other. For stocks, pairs can be shares of two companies in same (or related) industry. For options, it can be options on highly related stocks. For futures it can be mini and full-size contract or can be futures of related (same) industries. And for forex it can be currencies of countries having good trade relations. Traders should use various fundamental and technical analysis tools to find these pairs. Once pairs are identified the strategy is simple.
Pairs traders look for divergence of correlation between shares of a pair. When a divergence is noticed, traders take opposite positions for instruments in a pair. For stocks, currencies and futures, the trader takes long position for under performing instrument and short position for over performing instrument; for options, the trader writes put option for underperforming stock and call option for outperforming stock. In most cases cost of taking one position is compensated by the revenue from the opposite position. Trader is profited when the divergence is corrected and the instruments are brought to original (near original) correlation by market forces.
Pairs trading strategy demand good position sizing, market timing and decision making skill. Although the strategy does not have not much downside risk there is a scarcity of opportunities and, for profiting, the trader must be one of the first to capitalize on the opportunity.
Statistical Arbitrate, popularly called StatArb, is the broad scale application of Pairs trading strategy. The strategy is to profit from pricing inefficiencies in the market and to make profit by tracking divergences from correlation. But unlike pairs trading, the StatArb include downside risk.
In statistical arbitrage, traders constitute portfolios consisting of a number of different stocks, which are carefully matched for reducing market risk and stock beta. Stocks are carefully screened using fundamental and technical tools; this includes industry, beta, volume, growth, value and performance history. Usually the stocks in the portfolio are scored using mean-diversion principle and other mathematical models. Usually the stocks which are underperforming receive high scores; and outperforming stocks receive low scores. The strategy is to take long position on high score stocks and take short positions on low score stocks.
With both pairs trading and statistical arbitrage continuous data mining, market and price analysis and price matching are important. High position sizing, low trading costs and better trading platforms can offer better profits.
About the Author
NobleTrading is an Online ETF Trading Broker offering direct access discount market trading services. Join Noble Trading and Investing FaceBook group to get great trading insights and knowledge.
Pairs technical skating: Is the male skater allowed to toss the female partner as high as he wants to?
Do you remember the 2006 Torino Olympics when the last Chinese pair took the ice for their free skate and attempted a quadruple flip toss and the female Chinese skater landed in the split position on the ice? Isn't it dangerous that some of these female skaters are being thrown at such a great height? Can't the female partner complete the number of revolutions in the air without being thrown at such dangerous heights? I think pairs technical skating is the most dangerous of the 4 divisions, especially for the female skater. They can easily fall due to the fault of the male skater.
It is quite dangerous, but they must take risks, and it hurts a lot. Yes, male skaters are allowed to throw females as high as they can, and that is usually what they doo.
Mishkutenok & Dmitriev RUS 1994 Lillehammer, Pairs' Technical Program