Why does the author prefer using the ratio as the variable for pair trading? Option: "The ratio reflects the market valuation of the stocks and provides insights into their relative price movements.", "The ratio is a more widely accepted metric in the financial industry, leading to greater transparency.", "The ratio is simpler to calculate and interpret compared to the spread or differential.", "The ratio is less volatile than the spread or differential, making it easier to manage risk."

Why does the author prefer using the ratio as the variable for pair trading?

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

What is the key principle behind identifying pair trading opportunities based on the ratio?

What is the primary reason for selecting only one variable (spread, differential, or ratio) for pair trading?

What is the 'Error Ratio' used for in pair trading?

How does the concept of standard deviation relate to pair trading based on the ratio?