about correlation

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about correlation

Postby vu34476 » Mon Dec 05, 2011 6:40 am

hello,

suppose i have two entry signals with two major pais. and i'm working with intraday chats

what is the timeframe that i need to Calculate (how many days?) the current correlation between those pairs, so i'll know if to enter a position in the two of them or just one?

and what cofficient number tells me to trade just one of them?

thx
liron peleg
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Re: about correlation

Postby Apprentice » Tue Dec 06, 2011 3:29 am

Can you describe your trading strategy in more detail.
I'm not sure if I understand you.


correlation coefficients
1
The two currencies are correlated.
0
The two currencies are not correlated.
-1
Two currencies have unverznu correlation

Treading Game Plan.
(This is just an example)
For the two currencies that have high correlation.
And at the moment for some reason currently have a negative correlation.
Trader can enter the trade, anticipate return of correlation, in normal conditions.

For me, this is primarily a tool for risk control.

Similar to the strategy I described for Sprade Tradinig indicator.
viewtopic.php?f=17&t=2073&hilit=spread
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Re: about correlation

Postby vu34476 » Tue Dec 06, 2011 4:29 am

yes,
suppose i have two entry signals right now..and im swing trading
1- Long USD/CAD
2- LOng USD/CHF
- im working with hourly timeframe.
i checked that the last 10 days the correlation between the pairs was 65 (cofficiant number)

is it good that i checked the correlation for just the last 10 days?
is the number 65 should tell me that i dont need to enter both trades?
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