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 Journal of Statistics and Management Systems cover
Open Access ·Peer-reviewed·ISSN (Online): 2169-0014·ISSN (Print): 0972-0510
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The Journal of Statistics and Management Systems (JSMS) is a world leading journal publishing high quality, rigorously peer-reviewed original research on theoretical and applied statistics and management systems since 1998. The scope is intentionally broad, but papers must make a novel contribution to the field to be considered for publication. Topics include, but are not limited to, the following: • Statistics • Applied Statistics • Industrial Statistics • Statistical Inference • Interdisciplinary role of Statistics • Actuarial Sciences • Decision Sciences • Managerial Aspects • Management Sciences • Management Information Systems

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Open Access Research Article

Risk management and return trade-offs in gold and silver pair trading  : Quantitative approach

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pp. 1403–1417Vol. 28Issue 8November 2025DOI: 10.47974/JSMS-1504XML
Received:
08 Apr 2025
Published Online:
24 Nov 2025
Article type:
Research Article
Language:
EN
Article no.:
JSMS-1504
Pages:
1403–1417

Abstract

Volatility is a critical determinant of market dynamics, shaping trading decisions and outcomes. Extreme volatility events, often precipitated by geopolitical developments or policy shifts, significantly influence asset prices. Recent empirical evidence underscores the heightened risks faced by individual traders in derivative markets, with a substantial proportion incurring losses. This study comprehensively examines risk management and return trade-offs within the context of gold and silver pair trading. Pair trading, a market-neutral strategy, leverages the historical correlation between two assets—Gold and Silver—to generate returns. This paper explores methodologies for identifying cointegration and establishing trading signals, employing statistical tools such as Johansen’s Cointegration Test for short-term returns and the Granger Causality Test for long-term returns. The study aims to develop a practical framework for implementing and managing Gold and silver pair trading strategies, emphasizing the balance between profit potential and inherent risks. Utilizing historical price data, the study back tests and evaluates the performance of proposed strategies, providing insights into the efficacy of various risk management techniques and their impact on overall returns.

Keywords

Subject Classifications

91G20

References

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