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.
Becky, I have traded stat arb for years, this is the best book I have read on pairs trading- Andrew Pole - Stat Arb