Possible Pair Trading: SembCorp Industries / SembCorp Marine? Possible stock rotation?
I came across a report on pairs trading written by SGX dated Feb 2010. (http://www.sias.org.sg/files/Trading%20Strategies%20Series_Pair%20Trading%20(1%20of%206).pdf)
Pairs trading refers to opposite positions in two different stocks or indices, that is, a long (bullish) position in one stock and another short (bearish) position in another stock. The objective is to make money on the relative price movements between them. The two stocks might both go up, but the stock you are long will go up more and faster than the stock you are short. Or, the two stocks might both go down, but the stock you are short will drop more and faster than the stock you are long. One half of the pairs trade may be profitable, and the other half of the pairs trade may lose money, but the goal ......
