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(security("A",C)-security("B",C))/security("A")*100 {percentage plot}
Not sure what you mean about plotting security A as a straight line.
-----Original Message-----
From: kevin_barry@xxxxxxxxxxxxx
To: equismetastock@xxxxxxxxxxxxxxx
Sent: Sat, 14 Apr 2007 6:37 AM
Subject: [EquisMetaStock Group] Pairs Trading Perhaps Using The Security Function
Hello,
Could I pick your (collective) brains?
Two securities can be compared using the Security function and then
subtracting or dividing one plot from the other. The results in a trending
plot.
What I would like to achieve is to plot equity A as a straight line and
then have the second plot displaying the difference between equity A and
equity B. Ideally, this plot would indicate the percentage deviation rather
than just the number of points difference.
For those of you interested, the idea behind Pairs Trading is to identify
two stocks that are closely correlated. When a divergence is detected, one
would go long, say, equity A and short equity B in anticipation of the
correlation being reestablished in the future. It is a market neutral strategy.
Is this doable in Metastock?
Regards,
Kevin
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