Mark Weetman, assisted by Brian Mashora, manages our flagship |Vunani| Market Neutral portfolio. Our weekly Head-to-Head bulletin will bring you one of Mark’s top pairs trades to add to your portfolio.

What is a pairs trade?

1. Identify which shares have significantly over or underperformed relative to one another in the same sector for no particular reason;
2. Determine whether this move away from the normal relationship between the two shares is the result of a fundamental shift or due to general market movements.;
3. Determine what ratio is expected for the two shares to trade at and thus whether the ratio will diverge or converge from its mean (normal relationship);
4. Enter the trade by going long (buying) the underperforming share and going short (selling) the performing share and profiting from the convergence of the two share prices;
5. Unwind your pair at target and hopefully bank your profit;
6. Easy!

Here is an example of one of our trades: 

Mark Weetman, assisted by Brian Mashora, manages our flagship |Vunani| Market Neutral portfolio. Our weekly Head-to-Head bulletin will bring you one of Mark’s top pairs trades to add to your portfolio.

What is a pairs trade?

1. Identify which shares have significantly over or underperformed relative to one another in the same sector for no particular reason;
2. Determine whether this move away from the normal relationship between the two shares is the result of a fundamental shift or due to general market movements.;
3. Determine what ratio is expected for the two shares to trade at and thus whether the ratio will diverge or converge from its mean (normal relationship);
4. Enter the trade by going long (buying) the underperforming share and going short (selling) the performing share and profiting from the convergence of the two share prices;
5. Unwind your pair at target and hopefully bank your profit;
6. Easy!

Here is an example of one of our trades: