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.

Strategy performance is very impressive :fisheye::
70,5% stock pairs is profitable at 2 years period
Average stock pair net revenue 110% p.a. (including loosing pairs!)
Average trade 94,6$ (allocated capital 10.000$; trade length 12 days)
Average win% is 65.3%, RRR = 0.824
Tested 90.000+ stock pairs from all sectors of US economy (with no optimization!)

Do you have experience with this kind of trading? Appreciate any ideas, tips ... or questions... ;-)

Petr