--- title: "What is pair trading, and is there an NSE pair trading stock" description: "Pair trading takes a position in two related prices when their spread moves far from its usual level, betting that the spread returns." source_url: "https://www.rupeecase.com/learn/questions/what-is-pair-trading" --- Two index prices that move together still need their spread to stay tied to count as a pair Nifty 50 and bank index closes, rebased to the first day, from 1 Jul 2025 to 15 Sep 2026, with the z-score of their spread below. An illustration of the method, not a recommended pair. Source: NSE end of day data, computed by RupeeCase. As of 15 Sep 2026. A pair is two prices that have moved together for a long time. The trade watches their spread, which is one price less a fitted multiple of the other, and takes a position when the spread sits far from its average. It exits when the spread returns. The chart shows two index prices and the z-score of their spread, as an illustration of the method and not a recommended pair. Correlation is only the start. The two index series above move together closely from day to day, yet the test that matters is cointegration: the spread has to stay tied over time, so a move away is pulled back. Two prices can be highly correlated and still drift apart for long stretches. Half-life measures how long a gap usually takes to close, and it sets the lookback and a time limit. The z-score measures how far the spread is from its mean, in units of its own volatility. These are measures, not rules. A threshold for the z-score is a choice, and a pair can move well past it. Indian rules make pairs harder. A retail account cannot easily hold a cash short overnight, so both legs are often stock futures. The lot sizes differ, which makes the hedge ratio lumpy, and an F&O ban period can block new positions in one leg. Costs fall on both legs, including STT on the futures sale at 0.05% from 1 Apr 2026. NSE publishes prices and contract data, not a list of pairs. A list shared elsewhere is chosen from past data. If the same data picks the pairs and tests them, the result is biased, so a pair should be tested on prices it was not picked from. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What is pair trading, and is there an NSE pair trading stock list?Pair trading takes a position in two related prices when their spread moves far from its usual level, betting that the spread returns, so it trades the gap rather than the direction of the market. NSE publishes no pair list, and any list has to be tested on prices it was not chosen from, because pairs that looked related often stop being related. Partly right, and mostly wrong as stated. Co-movement is where the search starts, not the proof. The spread has to stay tied over time, and a list is a starting point to test, not a trade. LGo deeper ## Where Learn teaches this. [Go deeperWhy futures trade above spot: basis, carry and convergence8 min, Beginner](/learn/path-13/module-13-2-futures-basis-and-carry)[Go deeperPosition sizing and risk of ruin for F&O beginners8 min, Beginner](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin) SSources ## Go to the source. 3 sources, NSE the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [NSE, Nifty 50 index page (constituents and index description)](https://www.nseindia.com/products-services/indices-nifty50-index) NSE 2. [SEBI investor education, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI 3. [NSE circular NSE/FATAX/73524 (STT rates from 1 Apr 2026)](https://nsearchives.nseindia.com/content/circulars/FATAX73524.pdf) NSE ?Questions people ask ## Related questions. [QuestionWhat are open interest, change in OI and cumulative OI?Beginner](/learn/questions/what-is-open-interest)[QuestionWhat are futures and options (F&O kya hai)?Beginner](/learn/questions/what-are-futures-and-options)[QuestionWhat are SEBI's F&O rules on lot size, weekly expiry and upfront premium?Beginner](/learn/questions/sebi-fo-rules)[QuestionFutures or options: which suits a beginner?Beginner](/learn/questions/futures-or-options-for-beginners)[QuestionIs algo trading legal in India for retail?Beginner](/learn/questions/is-algo-trading-legal-in-india) [All 130 questions](/learn/questions/) Explore next ## Go deeper on this question. * [QuestionCointegration or correlation: what is the difference?A short answer with a dated chart](/learn/questions/cointegration-vs-correlation) * [QuestionWhat is a Kalman filter pairs strategy?A short answer with a dated chart](/learn/questions/kalman-filter-pairs) * [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder) * [GlossaryInvesting glossary, 230 termsPlain word definitions, and the app’s own](/learn/glossary) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. New to RupeeCase? [Getting started](/getting-started) [See the terminal](/terminal) [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.