Lecture 17 (Module 3). Pairs Trading
Pairs trading - a genuinely different risk profile from every other stock-market strategy in this course. What are advantages?
Thandiwe Mbeki
Published · Updated
What Is Pairs Trading?
Pairs trading is a market-neutral strategy: simultaneously going long one stock and short a related stock. Typically two companies in the same sector with a historically strong price relationship (for example, two JSE-listed banks) betting on the relationship between them reverting to its historical average, rather than betting on the market’s overall direction.
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