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Pair Trading Lab offers advanced tools for setting up and trading your own pair trading portfolios:

  • Database of 600,000 pre-analyzed pairs (US stocks) ready for exploring
  • Advanced online backtester and study generator
  • Online cointegration analyzer
  • Private repository of backtests, studies and pairs
  • Portfolio organizer & backtester
  • Automated trading platform
What Is Pairs Trading?
people

Pairs trading is a market neutral trading strategy enabling traders to profit from virtually any market conditions: uptrend, downtrend, or sideways movement. This strategy is categorized as a statistical arbitrage and convergence trading strategy.

The strategy monitors performance of two historically correlated securities. When the correlation between the two securities temporarily weakens, i.e. one stock moves up while the other moves down, the pairs trade would be to short the outperforming stock and to long the underperforming one, betting that the "spread" between the two would eventually converge. The divergence within a pair can be caused by temporary supply/demand changes, large buy/sell orders for one security, reaction for important news about one of the companies, and so on. Read more at Wikipedia.

Why Trade Pairs?

Thanks to market neutrality, this trading strategy can be very safe (if diversified) and immune to global market crisis, even when the entire market or sector falls down. If you trade enough pairs at the same time, your pair trading portfolio could perform well also in difficult market situations.

Let's take a look on example: we take these two stocks - GlaxoSmithKline plc and Novartis AG. These are stocks of companies in the healthcare sector and their prices are quite correlated (correlation 0.73 for last 5 years). Now, let's make a backtest of difficult period of 2008-2009 where the stock market dropped a lot because of the crisis:

Backtest GSK vs NVS in period 2008-2009

As you can see, prices of both stocks dropped considerably in this period (i.e. NVS price dropped by terrifying 38%). But if you traded these stocks as a pair, you would gain amazing 128% of initial capital (considering 50% margin) with drawdown being just 6.4%, which is an excellent result for this difficult period!

How This Website Helps You?

This website represents a complete set of tools you require to setup your own pair trading portfolio, all in one. You may use it to:

[1] fully available to Premium Members only

Latest News
2015-02-12
New Models Added
Two brand new trading models have been added to both backtester and analyzer. Check them out! This analysis already includes stats from these models. One of them has self-optimizing capability!
2015-01-02
PTL Trader v1.2.0 Released
PTL Trader v1.2.0 has been just released, introducing support for RSI and all entry modes in Residual model. Changelog
2014-12-18
Pair Analyzer Released
We are proud to introduce an online pair analyzer tool, which allows you to quickly analyze pair's correlation, cointegration, residuals and profits. This feature is available to all users. Example analysis
2014-11-27
RSI Filter Added
Our backtester now supports additional RSI filtering in Ratio model. Try it out!
2014-11-25
Kalman Model Added
Kalman filter based pairs trading model is now supported in the backtester. It is the same model as described in the second book of Ernie Chan. Take a look on the backtest of EWA/EWC from the book.
2014-11-02
Migration Finished
All systems have been migrated and all services are back online. If you encounter any issues, please report them to Helpdesk. Thanks!
2014-10-31
Limited Availability
Because of the system migration to new cloud infrastructure provider, PTL website and some services won't be available during this weekend (Nov 1st - Nov 2nd). More info in the forum and Twitter.
2014-10-07
PTL Trader v1.1.1 Released
PTL Trader v1.1.1 has been just released. Changelog
2014-09-19
Partnership Announcement
Pair Trading Lab is now official partner of AlgoTrader GmbH, the provider of state-of-the-art automated trading platform. We work together to bring advanced pairs trading solutions to enterprise clients.
2014-08-28
Portfolio Backtester Released
Premium users now can take advantage of portfolio backtester engine. Example here
2014-08-13
PTL Trader v1.1.0 Released
PTL Trader v1.1.0 has been just released. Changelog
2014-03-19
PTL Trader v1.0.6 Released
PTL Trader v1.0.6 has been just released. This is just a small bugfix release. Changelog
2014-02-02
New Website!
The whole website has been redesigned and just deployed. Please be patient untill we fix all the issues, thanks!
2014-01-18
Database Recalculated
Fresh year, fresh database! The pre-screened database has been just recalculated.
2013-11-07
PTL Trader v1.0.5 Released
PTL Trader v1.0.5 has been just released. Changelog
Recent Analyses

XLK vs VGT

2012-01-01 till 2015-03-01

Co95:
Co99:
CAGR:-0.19

XLE vs XOP

2012-01-01 till 2015-03-01

Co95:
Co99:
CAGR:0.28

VALE vs VALE.P

2012-01-01 till 2015-03-01

Co95:
Co99:
CAGR:2.60

AAPL vs GOOGL

2012-01-01 till 2015-03-01

Co95:
Co99:
CAGR:-5.78

AAPL vs GOOGL

2012-01-01 till 2015-03-01

Co95:
Co99:
CAGR:-5.78
Recent Backtests

AAPL vs GOOGL

2010-01-04 till 2015-02-27

ROI: -32.60
CAGR:-7.37
MaxDD:41.76

RTH vs SPY

2010-01-04 till 2015-02-27

ROI: -3.92
CAGR:-0.77
MaxDD:16.17

RTH vs SPY

2010-01-04 till 2015-02-27

ROI: -13.95
CAGR:-2.87
MaxDD:19.22

ANTM vs MOH

2010-01-04 till 2015-02-27

ROI: -64.62
CAGR:-18.27
MaxDD:70.83

IBM vs MSFT

2014-01-02 till 2015-01-30

ROI: 12.14
CAGR:11.23
MaxDD:5.09
G+ FB LN TW

Disclaimer: Backtested, simulated or hypothetical performance results have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. There are numerous factors related to the stock market in general and to the implementation of any stock market timing program, which cannot be fully accounted for in the preparation of hypothetical performance results. The backtested results listed here do not take into consideration slippage, fees, taxes, or dividends and interest earned on cash positions. These factors would affect actual trading results. Simulated, backtested or hypothetical stock trading systems in general are also subject to the fact that they are designed with the benefit of hindsight. Backtested performance does not represent actual performance and should not be interpreted as an indication of such performance. No representation is being made that you will or is likely to achieve profits or losses similar to these being shown. This site provides impersonal educational stock trading information, and therefore, no consideration can or is made toward your financial circumstances. All material presented within is not to be regarded as investment advice, but for general informational purposes only.