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I wanted help to develop the density curve of a particular pair.
e.g density curve of GOOG / AAPL
Density Curve Defination
A density curve looks similar to a bell curve, with the data evenly distributed around the mean. However, our curve will actually show up as more of a moving histogram, depicting where our current and historical differential or ratio are in regard to the mean. The density curve itself will yield a value between zero and positive one. Our buy signals will typically (though this changes from pair to pair) be triggered when the pair is within 0.003 thousandths of zero. Conversely, the density curve will indicate a potential selling point when our data nears 0.997 thousands of positive one.
Parameters required are
Ratio of GOOG / AAPL
Mean of GOOG / AAPL
Standard Deviation of GOOG / AAPL
e.g density curve of GOOG / AAPL
Density Curve Defination
A density curve looks similar to a bell curve, with the data evenly distributed around the mean. However, our curve will actually show up as more of a moving histogram, depicting where our current and historical differential or ratio are in regard to the mean. The density curve itself will yield a value between zero and positive one. Our buy signals will typically (though this changes from pair to pair) be triggered when the pair is within 0.003 thousandths of zero. Conversely, the density curve will indicate a potential selling point when our data nears 0.997 thousands of positive one.
Parameters required are
Ratio of GOOG / AAPL
Mean of GOOG / AAPL
Standard Deviation of GOOG / AAPL