Financial Analysis - Build a ChatGPT Pairs Trading Bot - Asking ChatGPT for Pairs

The video tutorial covers the process of selecting assets for a pairs trading strategy, emphasizing the importance of correlation. It explains how to compute correlation between asset returns and demonstrates coding techniques to retrieve asset prices using Python. The tutorial also includes debugging and code adjustments, followed by an analysis of the trading strategy's results, highlighting the performance of different asset pairs.

What is a key characteristic to look for when selecting assets for a pairs trading strategy?

• Assets from different industries

• Assets that are highly correlated

• Assets with low market capitalization

• Assets with high volatility

Which of the following pairs is suggested for a pairs trading strategy due to their strong positive correlation?

• Tesla and Ford

• Coca-Cola and Pepsi

• Amazon and Netflix

• Google and Facebook

What is the purpose of computing the correlation between two data sets in pairs trading?

• To determine the volatility of the assets

• To find the average return of the assets

• To assess the relationship between the returns of the assets

• To calculate the risk of the assets

What is a hyperparameter in the context of computing correlation for pairs trading?

• The market capitalization of the assets

• The industry of the assets

• The number of assets to analyze

• The time window for calculating returns

Which library is used in Python to retrieve historical asset prices for pairs trading?

• Matplotlib

• Pandas

• NumPy

• Y Finance

What is the purpose of the 'tail' method in the code example provided?

• To calculate the average price

• To verify the last five rows of downloaded data

• To retrieve the first five rows of data

• To sort the data in ascending order

What was a key issue encountered during the debugging process?

• Missing import statements

• Incorrect date range

• Incorrect asset tickers

• Mismatched data types

Why was the spread initially not working in the code?

• The assets were not downloaded

• The wrong library was used

• The data was not in the correct format

• The correlation was not calculated

What was observed about the pairs trading strategy during the early period of the pandemic?

• It was highly volatile

• It outperformed the market

• It remained unaffected by market drops

• It suffered significant losses

What was the result of using Microsoft and Apple as a pair in the trading strategy?

• A gain of about 20%

• A loss of about 20%

• A significant profit

• A break-even result