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

  • Database of more than 10,000,000 pre-analyzed pairs
  • Advanced online backtester
  • 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 Does This Website Help 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] available to Premium Members only
[2] fully available to Premium Members, limits apply to regular users

Latest News
2016-02-07
New Website Features
We are pleased to announce interesting features and updates to this website. More info
2015-12-21
PTL Trader v1.2.4 Released
PTL Trader v1.2.4 has been just released. Changelog
2015-12-18
Learn to Pay in Bitcoin
Until we support credit card payments, you can use your credit card to buy Bitcoin at Coinify and pay your membership with Bitcoin directly! It is the safest way to pay online anyway. More info
2015-11-11
AlgoTrader Integration
We are happy to announce that AlgoTrader has developed an interface to our platform and it is now available to their clients for free! More info here
2015-10-13
New Payment System
We now use OKPAY as our primary payment system, providing new payment methods like Sofort Banking, Litecoin, ... Direct payments by credit cards are not yet supported, however you can use exchangers to charge your OKPAY account. Verified LavaPay users can pay by credit cards already.
2015-07-23
PTL Trader v1.2.3 Released
PTL Trader v1.2.3 has been just released. Changelog
2015-04-30
Bitcoin Accepted Here
You can now pay your premium membership by Bitcoin! The whole payment process is fully automated. Credit cards will be accepted in 2-3 months.
2015-04-18
PTL Trader v1.2.2 Released
PTL Trader v1.2.2 has been just released, solving Java 1.8 installation issues. Changelog
2015-04-15
Software License Model Changed
We have decided to release PTL Trader and Portfolio Backtester to our regular users, too (with limitations). In order to access the Pair Database, premium membership is still required.
2015-03-30
New Pair Database
Brand new database has been just released! The new system has been redesigned from scratch, now contains more than 10,000,000 pairs and includes cointegration test results and measures!
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.
Recent Analyses

DIA vs SPY

2016-01-01 till 2016-07-29

Co95:
Co99:
CAGR:1.38

IBB vs XBI

2013-01-01 till 2016-07-28

Co95:
Co99:
CAGR:-0.30

LULU vs STRA

2011-07-29 till 2016-07-29

Co95:
Co99:
CAGR:-3.75

ADDYY vs VRA

2011-07-29 till 2016-07-29

Co95:
Co99:
CAGR:-0.53

DAL vs AAL

2015-01-01 till 2016-07-01

Co95:
Co99:
CAGR:0.17
Recent Backtests

UVXY vs SVXY

2011-12-12 till 2016-06-30

ROI: 0.00
CAGR:0.00
MaxDD:0.00

UVXY vs SVXY

2011-12-12 till 2016-06-30

ROI: 0.00
CAGR:0.00
MaxDD:0.00

UVXY vs SVXY

2012-10-01 till 2016-06-30

ROI: -102.59
CAGR:0.00
MaxDD:102.10

PEP vs KO

2011-01-03 till 2016-06-30

ROI: 5.99
CAGR:1.06
MaxDD:26.09

IBB vs XBI

2016-01-04 till 2016-07-27

ROI: 5.67
CAGR:10.33
MaxDD:6.51
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.