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Which of the following Statements are true: ( more than one statement can be true) Consider the Pairs Trading Strategy in the technical analysis for financial markets

Finance Jan 17, 2021

Which of the following Statements are true: ( more than one statement can be true)

Consider the Pairs Trading Strategy in the technical analysis for financial markets.

1. In Pairs Trading, when the spread exceeds the - C threshold, we should go LONG on Asset 1 and SHORT on Asset 2

2. In Pairs Trading, when the spread exceeds the C threshold, we should go LONG on Asset 1 and SHORT on Asset 2

3. In Pairs Trading, when the spread exceeds the C threshold, we should go SHORT on Asset 1 and LONG on Asset 2

4. In Pairs Trading, when the spread exceeds the - C threshold, we should go SHORT on Asset 1 and LONG on Asset 2

Expert Solution

Correct answer is 1st one and 2nd one.

In pairs trading when the spread exceeds the -C threshold ,we should go long on Asset 1 and short on Asset 2 is correct statement.

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