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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
  • Private repository of backtests, studies and pairs
  • Strategy portfolio organizer
  • Automated trading platform
What Is Pair Trading?
people

Pair 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

Any Pair Trading Tips?
Identifying "Good Pairs" for Trading:
Latest News
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
2013-09-20
Database Recalculated
The pre-screened pair database has been recalculated using data^HQ system.
2013-09-09
data^HQ System Introduced
data^HQ system is an effective solution to improve input price data quality for backtests and studies. Read more in this forum thread. Pre-screened pair database based on data^HQ price data will be available soon.
2013-08-27
PTL Trader v1.0.3 Released!
The first stable version (v1.0.3) of PTL Trader has been released! Beta testing phase of this project is now finished, you may start trading live accounts using PTL Trader. Changelog
2013-05-17
PTL Trader Released!
PTL Trader Beta (v0.9.6b) has been just released for public testing. It is now available for download to all Premium Members.
2013-04-09
PTL Trader News
First feature-complete version of PTL Trader is already in internal beta testing phase since April and already closed few pair positions in profit. Now we are working on web application for managing strategy portfolios and fixing first issues. Public beta version of PTL Trader is expected to be released in May to all users applied for testing.
2013-02-09
Stricter Result Filtering
After some feedback related to studies containing incorrect price spikes (unfortunately coming already from the historical data provider), we adjusted filters in pre-screened search to be a lot stricter. Now you should find more relevant pairs using the database search.
2013-02-05
Database Recalculated
The pre-screened database update has been completed. Some statistics:
Pairs screened:600,787
10-year studies:19,775207,860
5-year studies::34,172370,595
6-month studies:45,576582,255
Figures in green indicate pairs exhibiting minimum CAGR >= 0% (profitable pairs for all settings), figures in black are totals.
2013-02-05
Forum & Helpdesk
There is a new forum available to support the community of pair traders and this website users. The purpose of helpdesk is to track issues reported by this website users and also by future PTL Trader users.
2013-02-05
New Homepage
Enjoy the brand new homepage, providing more info about pair trading and this website.
2013-01-26
Automated Trading Solution
We are happy to announce our own, proprietary trading application called PTL Trader. This application will allow our premium members to execute their portfolios of pair trading strategies live, in real-time. Same strategies with same settings as they backtested using this web site. Read more...
2013-01-20
Recalculating Database
Another year has passed and pre-screened studies started to become a bit obsolete. The system has already started re-calculating all studies (ending Dec 2012) using the new Ratio Engine. Number of pairs has been increased to 600,000, because we lowered liquidity filter thresholds (responsible for decision if we include the pair in the database or not). All the data will be ready for searching in approx. 2 weeks.
2013-01-19
New Ratio Model Version
Ratio model has been upgraded to new version (v 3). The difference is, how is the standard deviation calculated. Now it behaves in standard way as described in most of literature.
2012-10-13
Pre-screened Database Available
First version of pre-screened pair database is now available to public. It is huge, there are 350,000 pairs to search and inspect :-) Premium access is given to individual users on request for testing purposes.
Also, there is new My Pairs feature, which you can use to maintain lists of your favourite pairs, don't forget to check it out. This feature is also available to regular users.
Recent Backtests

SLV vs GLD

2009-01-02 till 2014-03-31

ROI: -48.57
CAGR:-11.91
MaxDD:57.53

KO vs PEP

2009-01-02 till 2014-03-31

ROI: 9.59
CAGR:1.76
MaxDD:30.41

MSFT vs JPM

2013-01-02 till 2014-03-31

ROI: 65.11
CAGR:49.79
MaxDD:14.05

MSFT vs JPM

2013-01-02 till 2014-03-31

ROI: 12.57
CAGR:10.01
MaxDD:15.50

NVS vs ABT

2009-01-02 till 2014-03-31

ROI: 23.05
CAGR:4.03
MaxDD:6.48
Recent Studies

CM vs BNS

2012-01-02 till 2014-04-15

CAGR:1.21
MaxDD:7.31
Score:0.17

SLF vs MFC

2012-01-02 till 2014-04-15

CAGR:5.89
MaxDD:11.05
Score:0.46

RY vs BNS

2012-01-02 till 2014-04-15

CAGR:-0.68
MaxDD:9.20
Score:-0.04

TD vs BNS

2012-01-02 till 2014-04-15

CAGR:2.23
MaxDD:8.03
Score:0.11

KO vs PEP

2012-01-02 till 2014-04-15

CAGR:4.29
MaxDD:8.54
Score:0.48
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.