Statistical arbitrage is a market-neutral trading strategy leveraging statistical methods to identify and exploit significant relationships between financial assets. Through hypothesis testing, it discerns pricing discrepancies within correlated asset pairs due to temporary market inefficiencies. By purchasing underpriced and selling overpriced assets, the strategy ensures profit as the market corrects these inefficiencies, regardless of overall market movements.
© The Author(s), under exclusive license to APress Media, LLC, part of Springer Nature 2023
P. LiuQuantitative Trading Strategies Using Pythonhttps://doi.org/10.1007/978-1-4842-9675-2_88. Statistical Arbitrage with Hypothesis Testing
Peng Liu1
(1)
Singapore, Singapore
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