Pairs trading — Selection via scoring systems
Abstract
In this Paper I determine the driving factors for successful stock pairs to further improve the pairs selection process while utilizing cointegration methods. I test my selection based on regression coefficients on two different trading approaches which both are based on cointegration, but handle identical pairs selections in consecutive periods differently. This is tested against the standard selection procedure based on the sum of squared distances. According to my findings I can identify the possible driving forces for successful stock pair selection and generate more competitive returns.
Fields of Study & Subjects
Financial Markets and Investment Strategies
Stock Market Forecasting Methods
Financial Risk and Volatility Modeling
Publication details
- Journal / source
- Finance research letters
- Volume
- 93
- Pages
- 109642–109642
- Publication date
- 11 February 2026
- Language
- EN