In pair trading, the primary focus is on the **residuals from the regression** analysis. Pair trading seeks to identify two securities with a historically correlated price relationship. Regression analysis helps quantify this relationship, and the **residuals** represent the deviations from this established pattern. Traders look for statistically significant divergences in these residuals, signaling potential trading opportunities where the pair's price relationship might revert to its historical norm. Therefore, analyzing **residuals** is crucial for identifying profitable pair trading opportunities. **SEO keywords:** Pair Trading, Regression Analysis, Residuals, Statistical Arbitrage, Mean Reversion, Cointegration, Trading Strategies.