Pairtrade

The idea of pair trading: Oil & Gas Drilling & Exploration ind.

NYSE:CXO   CONCHO RESOURCES INC
Ladies and gentlemen, I recommend you an idea of the pair trade:

1. it is long position in the company CXO             (Concho Resources) and short position in the company ESV             ( Ensco plc             ).
2. it is long position in the company CXO             (Concho Resources) and short position in the company CVE             ( Cenovus Energy Inc             .).

Stocks of the company CXO             are stronger than ESV             and CVE             since 2013. I think that next 2 months stocks of the company CXO             will be stronger than ESV             ana CVE             .

Risk-management:
I reccomend to use a conservative approach: half of allocated capital use in trade and half in cash.
Then the trade capital divide equally between 2 pairs: CXO-ESV and CXO-CVE.

The proportions of each company in pairs:
1. Volatility of CXO             and ESV             is equal, so:
* 51% it is long CXO             .
* 49% it is short ESV             .

2. Stocks of the company CXO             are more volatility than CVE:
* 44% it is long CXO             .
* 56% it is short ESV             .

This allocation between stocks is necessary for the parity volatility .

Sorry for my bad english.
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