Yay my 100.00000000000000000000000th post!

Im just looking around if that is viable. Im reading some stat arb in stock market. Basically discovering highly correlated pairs, according to arbitrage pricing theory types should have same prices in the market, and any deviations from another will collapse to the single same price. So this is exploited by us.

But notice, stat arb is not same is arb where theres riskless profit. Stat arb simply revolves around the idea that prices of comparable securities/instrument should be same, or revert to it if different at any stage. There are many risks involved its attractivness can be found in the market neutral nature of the egy.

Nevertheless, I am aware that currency pairs in FX market can vary time to time depending on the time frame. Such as the jpy pairs, they appear to be strongly correlated from one another at a minimum in shorter time frames (theres a complete collection of table of significance in Kathy Lien's book can not remember em all but reveals that significance changes drastically from - to in various time intervals ).

Additionally, stat arb in currency pairs are somewhat more of a releif as you dont have 5000 shares and 17 million potential pairings to test on.

Anyways, let me know what you guys think, I would like to find out more.