ASX Stock Pairs Trade Journal

[skc]

EOD.



7 closed trades. 6 still open. Overall P&L 2.2% (~1% for the past week).

 

[skc]

Trade #13 Opened. Long CPB @ $52.44 Short MND @ $21.88. Size = 15% of account.

Trade #13 closed. Sold CPB @ $54.6. Covered MND @ $21.9. Profit = 4.03%.

Not quite at target. Actually trailling a close stop on CPB to see if I can get a few ticks out of it but will mark the prices as far as this strategy is concerned.

 

[SilverRanger]

Trade #13 closed. Sold CPB @ $54.6. Covered MND @ $21.9. Profit = 4.03%.

Not quite at target. Actually trailling a close stop on CPB to see if I can get a few ticks out of it but will mark the prices as far as this strategy is concerned.

Good choice you picked there, my MRM isn't even doing half as good today!

With the dividend season coming, any thoughts on pairing up AREITs that pay dividend (but with 0% franking) and ones that don't (or already gone ex)?

 

[skc]

Good choice you picked there, my MRM isn't even doing half as good today!

With the dividend season coming, any thoughts on pairing up AREITs that pay dividend (but with 0% franking) and ones that don't (or already gone ex)?

I tend to avoid A-REITs during dividends as I don't like how bids disappear on ex date. But I don't mind trading ex-div shares with non-dividend paying ones (pretty much just WDC, WRT and LLC, although GPT and MGR pays quarterly). But I do trade them if the spread is big enough. CQR is a short at the moment but it's yielding 7%+ so I am waiting to see which long I'd put on.

MRM-MIO is a good pair although MIO is a bit of a takeover target in my books.

 

[skc]

Trade #14 opened. Long TSE @ $1.84. Short UGL @ $12.5. Size 10%.

 

[skc]

Trade #7 - IRE-SMX. I wrote on the IRE thread how it is a bit overvalued although historically well loved. IRE fell below support at $6.6 following the AGM so that should offer resistance even if it is to move further north. SMX on the other hand is imo a good value IT stock that's been caught up in the general sell down. If recent lows hold there is little resistance until $5.40. Profit target ~6-8%.

Trade #7 closed. Sold SMX @ $5.12 Covered IRE @ $6.16. Profit = 5.85%.

 

[Gringotts Bank]

Very nicely played sk.

 

[skc]

Eod. A new format!



It's always easy taking profits, but the management of these losing pairs are equally important. ALZ/WDC has hit the time limit, but I am going to hold for a little bit longer - I expect a spike up on ALZ announcing its dividend amount (assuming it's as per expectation) - which should happen this week.

Very nicely played sk.

Thanks.

 

[skc]

Chart for today.



Trade #14 TSE/UGL. Both companies are in the mining services space although they both have more steady, less exciting infrastructure services arms. UGL has bounced nicely off a recent low and is now sitting around 62% retracement level - so a potential holding area. TSE is in a hard downtrend and has been hitting new lows despite ongoing share buyback. If the market holds up, however, a retest of $1.94 (and potential $2) The ratio chart doesn't show a lot of crossing of the MA, but the divergence is substantial enough to warrant a trade.

Full convergence is over 10%, but I will only aim for half. I also won't hesitate cutting the pair if TSE can't hold its recent low.

 

[skc]

Trade #2 Closed. Sold ALZ @ $2.55. Covered WDC @ $9.32. P&L = -0.25%. First loss

Trade #15 Opened. Buy CPB @ $53.25, Short WOR @ $25.97. Size = 15% of account.

 

[notting]

Chart for today.

View attachment 47488
TSE is in a hard downtrend and has been hitting new lows despite ongoing share buyback. If the market holds up, however,

Wish I'd seen this earlier would have shorted UGL and waited to buy TSE.
L RIO and S BHP paid today. I think that makes 3 out of 4 from the original post. S HVN v L JBH still holding hands on their way to Hell.

 

[skc]

Trade #15 CPB/WOR. This is a sort-of re-entry of an earlier CPB/MND trade. CPB has support at $52-$54, while WOR is reaching resistance at $26.3. Full mean reversion at 6.5% away. So target is a meaningful chunk of that.

Certain stocks have certain labels in my head. CPB is always "Great company but too expensive", while WOR is "No idea why it deserves PE 16.5x". This meant that I've rarely if ever went long on WOR, even though it has as much up's as there are down's.



EOD



Not a great deal of movement P&L wise. NWH/ASL is reaching expiry so will aim to wriggle out of it over the next day or two. CPA announced a 3.2c dividend which was more than I expected - but the market seems disappointed.

S HVN v L JBH still holding hands on their way to Hell.

Lol. I think they are actually biting each other's head off on their way to hell.

 

[skc]

Added another 2.5%. NWH @ $3.06 and ASL @ $3.30.

Average Long NWH @ $3.08, Short ASL @ $3.325.

Position Closed. Sold NWH @ $3.01. Covered ASL @ $3.32. P&L = -2.12%

 

[skc]

Trade #16 opened. Long PTM @ $3.88. Short IFL @ $5.98. Size = 12.5%.

 

[kid hustlr]

Great thread SKC!

You seem to have an excellent understanding of how these companies operate, do you use this company knowledge in deciding your trades or do you base your decisions solely on the charts/correlation/S+R etc?

 

[skc]

Great thread SKC!

You seem to have an excellent understanding of how these companies operate, do you use this company knowledge in deciding your trades or do you base your decisions solely on the charts/correlation/S+R etc?

Thanks.

I definitely incorporate company knowledge into my trading. You can argue that, what's company fundamental has to do with anything when I am holding only a couple of weeks... but I think over time and over many trades, any small edge can accumulate into something meaningful.

What I haven't posted here are trades that I didn't take despite a signal being triggered. Sometimes I miss out on those profits, other times I avoid the losses. Here's one example. On 21 May the program signalled long MYR short GUD. We all know that discretionary retail is in the mother of all dog houses. I also know that MYR typically gives a quarterly update around that time. Long MYR is a clear avoid regardless what the correlation / support-resistance said. This pair has diverged ~20% since the trigger was given without ever being in profit.

 

[skc]

Trade #17 Opened. Long IOF @ $2.67. Short CQR @ $3.47. Size = 12.5%.

 

[skc]

Charts and EOD.

Long PTM short IFL - Both decent businesses in wealth management, with IFL having more of a focus on advisors while PTM is close to a pure fund manager. Thanks to the volatile market, many businesses in the industry are struggling. IFL has been range-bounded btw $5 and $6.4 for almost 12 months, and it's hard to see it cracking above it. PTM is also ranging between $3.40 and $4, although back in early May they went as high as $4.40. Change from May high is ~5% for IFL and -12.5% for PTM. Profit target ~4.5% based on mean reversion.


Long IOF short CQR - Office REIT vs Retail REIT, both going ex-div for ~3.5% with IOF giving a special dividend. Not the best entry on either leg. Had $2.65 / $3.5 and hessitated to pull the trigger on both counts. IOF is 5% off year high while CQR is setting new 52wk highs. With all the retail doom and gloom, CQR (and other retail REITs) are surprisingly resilient. Although the market is asking 7.5% yield from them, as opposed to office and industrial REITs which yield closer to 5-6.5%. Profit target ~4.5%. Will hold this pass ex-div date (25/6) if need be.





Closed 11 trades with a 9-2 win-loss. 6 open trades at pretty much breakeven.

Happy to be out of NWH-ASL with minimal damage. Some downgrades coming through with the construction sector (look at SWL) and NWH earns about 50% of revenue in civil construction.

SEK/CRZ ratio is hitting 6-month low - I just don't know what's keeping CRZ at 52wk high in this market. None the less the trade is ready to be scratched.

TSE has broken below again - hopefully there'd be a short bounce to $1.82-$1.84 which coinsides with UGL falling to allow for a good exit... or UGL launches a takeover offer for TSE @ $3.

Good fall on WOR today. One more day and we can call it a trade.

 

[skc]

Trade #11 CPA/WRT. I have traded both CPA and WRT before so the same "lean-on ex-div REIT" strategy applies here. WRT looks poised to move down from recent highs but CPA's chart isn't looking too bullish either. Both closing on the low today so the trade's profit will depend on the speed of fall of each share. Full profit potential is ~4.5%.

Position closed. Sold CPA @ $0.995. Covered WRT @ $2.71. P&L = 2.56%.

 

[skc]

Trade #15 CPB/WOR. This is a sort-of re-entry of an earlier CPB/MND trade. CPB has support at $52-$54, while WOR is reaching resistance at $26.3. Full mean reversion at 6.5% away. So target is a meaningful chunk of that.

Certain stocks have certain labels in my head. CPB is always "Great company but too expensive", while WOR is "No idea why it deserves PE 16.5x". This meant that I've rarely if ever went long on WOR, even though it has as much up's as there are down's.

Trade closed. Sold CPB @ $51.81. Covered WOR @ $24.37. P&L = 3.5%.

I have no problem taking small profits - it did 60% of the work in 2 days + it's a re-entry trade. It all adds up.