Z-Score Stat Trading

🔷 Z-Score Stat Trading
Description:

⚠️ This indicator is published for educational purposes only. All responsibility for its use lies solely with the user. It does not constitute financial advice or a trading recommendation.

The Z-Score Stat Trading indicator is a statistical tool designed for pair trading strategies, helping traders identify mean-reversion opportunities between two correlated assets.

This indicator analyzes the log-price spread between two user-defined symbols (e.g., BTCUSDT vs ETHUSDT) and calculates both long-term and short-term Z-Scores to detect overbought and oversold conditions.

📊 Key Features:
Dual Z-Score lines (long-term and short-term) for increased confirmation.

Dynamic correlation tracking between the two assets.

Volatility estimation based on log-return standard deviations.

Visual and alert-based entry signals when Z-Score crosses a customizable threshold.

On-chart table showing real-time correlation, spread, and volatility data.

📈 Strategy Logic:
Z-Score = (spread - mean) / standard deviation

A long signal is triggered when both long and short Z-Scores are below the negative threshold (e.g., -2).

A short signal is triggered when both Z-Scores are above the positive threshold (e.g., +2).

Spread is calculated as the difference between log-prices: log(Symbol A) - log(Symbol B)

This indicator is suitable for traders looking to exploit statistical arbitrage between highly correlated crypto pairs or other assets.

⚙️ Inputs:
Symbol A / Symbol B – The two assets to compare.

Long & Short Z-Score Periods – Defines how many bars are used in each Z-Score.

Correlation Period – Controls the window for calculating the rolling correlation.

Z-Score Threshold – The deviation level required to trigger signals.