pairs trading strategy using deep reinforcement learning, especiallydeepQ-networks,sincepairstradingstrategycan. A pairs trade is a market neutral trading strategy enabling traders to profit from virtually any market conditions. In this working paper the universe of eligible pairs is defined by the holdings of a given ETF. it doesn’t matter whether the market is trending upwards or downwards, the two open … Therefore, this project aims to further study the pairs trading strategy, and optimize the trading returns by tuning some of the parameters in the trading algorithm. I research that, is it possible to create an almost market neutral trading strategy in the commodity futures space, which abuses the single largest commodity futures excess return composition, roll return, as its main excess return driver. They found that in spite of considering trading costs and risk factors, an annual return of 11% is achieved. This strategy makes use of this character-istic which reduces the unusual risk in trading. Pairs trading is supposedly one of the most popular types of trading strategy. There is agreement that it worked fine in the far past. This strategy is categorized as a statistical arbitrage and convergence trading strategy. Then the spread is SS 12 E, where E Since its’ invention at Morgan Stanley in 1987 pairs trading has grown to be one of the most common and most researched strategies for market neutral returns. The strategy identifies stock that historically co-moved and forms a trading pair. Pairs trading keeps track of two historically correlated securities. 'Pairs Trading' is an investment strategy used by many Hedge Funds. Consider two similar stocks which trade at some spread. In this strategy, usually a pair of stocks are traded in a market-neutral strategy, i.e. Using this practice by Gatev which is the main and initial Complexity bethoughtofasagame.A eropeningaportfolioposition, the pro t can be set whether portfolio is closed, stop-loss position. If the spread widens short the high stock and buy the low stock. Pairs trading is a venerable trading strategy. Choose two securities model is 1, 2 and denote their prices as SS 12,. Literature review Research on PTS fall under the general finance banner of Since 1987, pair trading has grown to be one of the most common and most researched strategies for market neutral returns. The strategy identifies stocks, or other financial securities, that historically has co-moved and forms a trading pair. erefore, if we set this strategy … To detect adequate pair different types of pairs trading strategy using the minimum Distance method in selecting pairs and thresholding two standard deviations for pairs trading. It is expected that But it is less clear if it still profitable today. The profitability of pairs trading strategies 3 trading, copulas and cointegration. It is shown that the stocks must A description of our data-set is in section 3. The idea of this strategy is quite simple. Done as part of the final project for MOOC on Trading Algorithms by ISB. 1 : Select two stocks(or any assets) moving similarly 2 : Short out-performing stock, buy under-performing one Section 4 covers the research method.And finally, the results and conclusion are presented in sections 5 and 6, respectively. Pairs trading consists of long position in one financial product and short position in another product and we focus the form of statistical arbitrage instead of trend following; these strategies are market neutral and have low risk. strategy using the principles of pairs trading. The pair trading is a market neutral trading strategy and gives traders a chance to profit regardless of market conditions. 2. 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