PAIR TRADING

Pair Trading is an effective statistical arbitrage strategy that involves selecting a pair of correlated assets for hedging, aiming to achieve market-neutral profits. This strategy exploits the historical correlation between asset prices, trading when the price spread deviates from its normal range, with the expectation of profiting when the spread reverts. Based on time series analysis, Pair Trading can effectively reduce market volatility risk and enhance the stability and profitability of an investment portfolio.