The idea of pair trading: Industrial Metals & Minerals.Ladies and gentlemen, I recommend you the idea of the pair trade:
1. it is long position in the company OCIR (OCI Resources LP) and short position in the company RIO (Rio Tinto plc).
2. it is long position in the company OCIR (OCI Resources LP) and short position in the company ARLP (Alliance Resource Partners LP).
Stocks of the company OCIR are stronger than RIO and ARLP since 2014. I think that next 2 months stocks of the company OCIR will be stronger than RIO ana ARLP.
Risk-management:
I reccomend to use a conservative approach. The trade capital divide equally between 2 pairs: OCIR-RIO and OCIR-ARLP.
The proportions of each company in pairs:
1. Stocks of the company RIO are more volatility than OCIR:
* 53% it is long OCIR.
* 47% it is short RIO.
2. Stocks of the company OCIR are more volatility than ARLP:
* 37% it is long OCIR.
* 63% it is short ARLP.
This allocation between stocks is necessary for the parity volatilities.
Pairtrading
Pair trader: A new indicatorI figured I'd post this.
It's an indicator that plots the spread between two selectable instruments and also each individual instrument's line chart, with a colored fill to make it more clear visually when trading ratios.
In cointegrated pairs like audcad, you can trade the range extremes, and buy the laggard/sell the leader when overbought/sold conditions are met + distance from the 66/253 EMAs, as outlined in my AUDCAD post. (see related ideas)
Hope you find it useful!
Cheers,
Ivan.
AUDNZD: Bargain hunting in an uptrendAnalysis on chart + neowave wave chart (weekly plot) + a new indicator I coded.
See related ideas for the code.
Good luck!
Ivan.
AUDNZD: Long at support, bargain huntingAnalysis on chart + neowave wave chart (weekly plot) + a new indicator I coded.
See related ideas for the code.
Good luck!
Ivan.
