IDEAS home Printed from https://ideas.repec.org/a/axf/feiaaa/v2y2025i1p12-22.html
   My bibliography  Save this article

Pair Trading Strategy Based on Stock Price Differences

Author

Listed:
  • Dong, Jun

Abstract

This paper explores a pair trading strategy based on stock price differences, aiming to construct a market-neutral trading strategy that achieves arbitrage profits by analyzing the price differences between stocks. First, the paper reviews the basic principles of pair trading and analyzes the main factors influencing stock price differences, including fundamental, technical, and other multidimensional market factors. Next, the paper establishes a pair selection method based on price differences and validates the effectiveness of the strategy under different market conditions through empirical analysis. The study demonstrates that the pair trading strategy based on stock price differences can effectively capture price imbalances in the market and has strong risk control and return potential. Finally, the paper discusses the advantages and limitations of the strategy and suggests directions for future optimization.

Suggested Citation

  • Dong, Jun, 2025. "Pair Trading Strategy Based on Stock Price Differences," Financial Economics Insights, Scientific Open Access Publishing, vol. 2(1), pages 12-22.
    • Handle: RePEc:axf:feiaaa:v:2:y:2025:i:1:p:12-22
    as

    Download full text from publisher

    File URL: https://soapubs.com/index.php/FEI/article/view/304/315
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:axf:feiaaa:v:2:y:2025:i:1:p:12-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Yuchi Liu (email available below). General contact details of provider: https://soapubs.com/index.php/FEI .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.