Pair Trade Analyser

Pair Trading is a very popular market neutral strategy which takes out volatility from the market where one exploits the trading pattern between two similar shares in an attempt to generate a low-risk profit. Without taking a view of the overall direction of the market Trader buys an under priced security and simultaneously sells an overpriced security where he finds a pair of securities whose prices moves together or is highly correlated. This is most often seen in shares of companies from the same sector; for example, direct competitors such as SBIN and ICICIBANK.

We have to patiently wait for the best opportunity for pairs trading. Signals are hard to find for many pairs, thus we will have to monitor pairs among all nifty stocks. Manually it’s not possible to watch all possible pairs among nifty.

The “Pair Trade Analyser” application scans the hundreds of pairs from NSE and gives the right pairs to traders. The user has a choice to choose when it comes to generating signals using strategies devised from conclusions drawn from seeing the standard deviations and ratio standard deviations.

Usability:

Application “Pair Trade Analyser” scans the stocks from user selected stocks or sectors to find best pairs to trade according to its signal generating strategy. And this process only takes a couple of clicks and can be done in no time.

The tedious task of searching for a suitable pair is reduced to a few seconds.

Users have access to all relevant graphs like normalized charts, spread of the pair, ratio of pair and Standard Deviation levels etc.

Gives buy or sell signal for pairs upon user selected strategies like whether to use stock ratio, stock spread or when both are needed.

It has back test facility for user selected pair for his desired period and shows how many calls were generated during that period and what the profit/loss was. Currently it has over 10 years of data for the derivative stocks to back test.

Advantages:

It generates signals using standard deviation of the spread and price ratios or both.

User can choose the number of days in calculating standard deviation.

User can select a percentage of correlation which best suits him.

The system has a facility to show back-test reports for user defined pairs with previous 10 years of historical data.

User can add a pair to virtual trade and watch the performance in real time..