Pair Ratio Study

By Samantha Baltodano

What Is the Pair Ratio Study?

The Pair Ratio study is applied to composite symbols (e.g., "IBM+GOOG"); it calculates the ratio of close price of the first security to that of the second one.

The Pair Ratio study, like the Pair Trading strategy, is meant to hedge investor risk exposure to the movements of the broader market.

Note that in composite symbols, securities are ordered alphabetically. Pair Ratio is calculated for the first two instruments only. E.g., if the composite symbol "C+BAC+AMD" is entered, it will be normalized to "AMD+BAC+C", and the ratio will be calculated for AMD and BAC.

Pair Ratio Study is just one of many studies that Archaide automates. For a full list of strategies and studies available click here.

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