Can someone suggest a resource with a clean cut explanation of pair trading?
Becky, in order to get a good 'all around' grip of the concepts that you might encounter in statistical arbitrage, a good book would be the:
Statistics and Data Analysis for Financial Engineering (Springer Texts in Statistics)
, especially Chapter 9 onward. There you will find all the tools you need for your pairs-trading stat arb, like co-integration, necessary econometric tests etc.
Unfortunately there is not a black box that you will plug it in and make money out of it, while the basic idea remains the same, a number of things change for different asset classes and trading frequencies.
for statistical arbitrage strategy development you need past data. so i will suggest you to read ‘Trading Pairs’ by anjana gupta. This book cover how to get past data (daily, 1 minute, live) and how to backtest strategy before going live. this book explain statistics python and excel from very basic so that anyone who do not understand can develop and backtest strategies, book is available on amazon, published in dec 2020
Becky, I have traded stat arb for years, this is the best book I have read on pairs trading- Andrew Pole - Stat Arb