What is cointegration of time series data in statistics? How do you identify pairs of stocks for trading? Is it based on simple correlation analysis or is there a more rigorous method?



Cointegration is a vital tool to deal with time series data. It is a statistical property of the two or more time series variables that are co-integrated if they are non-stationary but also share a trend together.

Cointegration and correlation are different entity altogether.

Correlation is mostly used by beginners as it is easy but not that reliable as compared to cointegration which is used by more experienced because it is highly reliable but complex. If you feel it is very confusing then you can always consult to an advisory company like 100mcxtips, khelomcx etc to provide advice and tips based on these technical and fundamental analysis to make your trading profitable.

(Source: https://top.quora.com/What-is-cointegration-of-time-series-data-in-statistics-How-do-you-identify-pairs-of-stocks-for-trading-Is-it-based-on-simple-correlation-analysis-or-is-there-a-more-rigorous-method )



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