Qn. 1 / 5

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What does an ADF value of less than 0.05 indicate in pair trading?

The residuals are non-stationary

The stocks are not cointegrated

The residuals are stationary

The error ratio is high

Qn. 2 / 5

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What is the key trigger for initiating a pair trade?

Beta value

Intercept

Standard Error (Std_err)

ADF value

Qn. 3 / 5

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What action should be taken when the residuals hit -2.5 standard deviations in pair trading?

Sell Y and buy X

Sell both X and Y

Buy both X and Y

Buy Y and sell X

Qn. 4 / 5

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What is 'sigma' in the pair data report?

Today's residual

Standard error of the intercept

Beta value

Standard error of the residual

Qn. 5 / 5

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What factor determines the number of stocks of X and Y to trade in a pair?

Intercept

ADF value

Beta

Sigma