Posting new thread related to trading stock pairs.

I love pair trading strategy, it is holding my profits over last three years .

Some theoretical introduction:
The Stock Pair Trading is a market neutral strategy capitalizing on short-time market inefficiencies. The strategy is based on the fact that the ratio of prices of two suitably chosen (correlating) shares is long-term stable and oscillates around the average value. If (for whatever reason) ratio comes outside the normal area, you can speculate with high success rate that ratio will return to the mean value. Stock pair position is than formed by entering long and short position in two stocks of the same sector. This creates a powerful hedge against the sector and the overall market fluctuations.