"During the 1980s, a group of quants working for Morgan Stanley struck gold with a strategy called the 'pairs trade'. Institutional investors and proprietary trading desks at major investment banks have been using the technique ever since, and many have made a tidy profit with the strategy."

"Finding Profit in Pairs",September 2004, Investopedia.com

    Pair trading, also known as statistical arbitrage or spread trading, is a market-neutral trading strategy where the goal is to match two shares that are highly correlated, trading one long and the other short. When the pair's price diverges, a pairs trade is set up as the historic correlation between the securities suggests that the prices are expected to converge at some point. Capturing this movement in price allows traders to make profits.

    Er, it is a bit like LTCM model, but it is more simple .Maybe some hedge funds use this method , its risk is long positon down but short position up , it is a nightmare .