What is the key factor in pair trading? Option: Dividend payout ratio, Market volatility, Correlation between two stocks, Company's market capitalization

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What is the key factor in pair trading?

Dividend payout ratio

Market volatility

Correlation between two stocks

Company's market capitalization

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What is the core concept behind pair trading?

"Exploiting price discrepancies between related assets"

"Predicting future stock market trends"

"Identifying companies with identical stock prices"

"Investing in companies with high growth potential"

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What is the core principle behind pair trading?

Predicting future stock prices based on historical data

Exploiting temporary price discrepancies between co-integrated stocks

Identifying stocks with similar price movements

Investing in stocks with high beta values

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Which of the following is NOT a variable used to measure the relationship between two stocks in pair trading?

Spread

Ratio

Volatility

Differential

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How can you determine if two stocks are suitable for pair trading?

"By comparing their historical prices"

"By checking if their residuals are stationary"

"By calculating their correlation coefficient"

"By analyzing their fundamental data"

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What is the primary focus of pair trading?

"Minimizing investment risk"

"Diversifying investment portfolios"

"Maximizing short-term profits"

"Capitalizing on price differences between related securities"