Pair Trader Electric Utilities, Services, Real Estate, Precious Metals (TA)

The Pair Trader generates profit with low risk by trading two highly correlated stocks. This AI Robot generates two signals: one to buy and another to sell short to create a market neutral pair of stocks. Every 4 hours, the Pair Trader recalculates the distance between the stocks. Every minute it checks the entry and exit conditions for each pair.

The Pair trading strategy exploits deficiencies between the fluctuations of two highly correlated stocks. It works as follows if two stocks are 95% correlated then they move in parallel 95 times out of 100, and have a certain distance between their prices. But sometimes, market fluctuations create a situation where the distance between two stock prices is greater than normal, i.e. extreme. According to the pair trading strategy, at this moment one stock is bought and another is sold short with an assumption that sooner or later the distance between them will return to normal again. The profit is equal to the difference between extreme and normal distances .

This Pair Trader has stocks with capitalization more than $10B and uses only dollar neutral models which means that the legs of a pair are equal in dollar value ($10,000). The Robot's trading results are shown without using margin.

In the “Open Trades” tab, a user can see live how pair trading selects pairs, and enters and exits Paper Trades. In the “Closed trades” tab, a user can review all previous trades made by the pair trading AI Robots and analyze all statistics, such as maximum number of trades, Sharpe ratio, average winners and losers, etc.