BUSTED BY COSTS

Stock-vs-index ratio trend (pair) trading backtest: does it work after costs?

We coded the stock-vs-index ratio trend (pair) trading strategy exactly as taught in a public video and ran it on Stock futures, 2017-01 to 2026-10, with real charges. Our test: −₹40.72 L after real costs. As taught, the video's three pairs lost about ₹40.7 L from 2017 to 2026 at ₹10 L per leg, losing every year.

Net after costs: −₹40.72 L
Win rate: —
Worst drawdown: −₹42.87 L
Reality Score: 8/100

The rules, as taught

Plot the ratio of stock A to stock/index B with a 100-period average. Ratio above the average → long A, short B (equal rupee value); below → the reverse. Flip when it crosses back. Pairs with correlation ≥ 0.85.

What the video claims, and what we found

Claim: Example trades of about +15% on a pair in a few months.

The hand-picked example trades partly reproduce, but the rule loses across all 334 F&O stocks against NIFTY and on 77 sector pairs, even before costs. These pairs tend to snap back, so following the ratio's trend buys high and sells low.

See the full results, charts and every trade

Questions people ask

Does the Stock-vs-index ratio trend trading strategy work?

Not as taught, once real charges are included. As taught, the video's three pairs lost about ₹40.7 L from 2017 to 2026 at ₹10 L per leg, losing every year. Tested on Stock futures, 2017-01 to 2026-10, after real costs. Reality Score 8/100.

What is the win rate of the Stock-vs-index ratio trend trading strategy after costs?

We did not count a per-trade win rate for this one; the net result after real charges was −₹40.72 L with a worst drawdown of −₹42.87 L.

How much did it make or lose in the backtest?

Our test: −₹40.72 L after real costs. Over 2017-01 to 2026-10 (₹10 L per leg, stock and index futures), the net after charges was −₹40.72 L and the worst fall from a peak was −₹42.87 L.

What exact rules were tested?

How was the Stock-vs-index ratio trend trading backtest done?

On 1-minute exchange data since 2017, signals filled at the next minute's open, with real broker charges, STT, exchange fees, SEBI fee, stamp duty and GST, and the lot size of each date. Rules exactly as taught; gaps we had to fill are stated. Full method on our How we test page.

Run it yourself — coming soon

These rules use features our public backtester can't express exactly yet, so we won't pre-fill an approximation. Build your own idea in the meantime.

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Important

These are educational backtests of publicly taught rules, not investment advice or a recommendation to trade. Algrow is not registered with SEBI as an investment adviser or research analyst. Past results, real or simulated, do not predict future results; option trading can lose more than the premium or margin used.

Method: 1-minute historical exchange data; signals filled at the next minute's open unless the rules say otherwise; real broker charges, STT, exchange fees, stamp duty and GST; lot size as on each trade date. Where a video leaves a rule open, the assumption we made is stated. We test only the rules as presented and paraphrase the claim; watch the video for the creator's full explanation. Full method: how we test.

Creators can request a review, correction or takedown using this form. We review every request within 7 days, re-run the test where needed and update the page.