Long DRAM / Short SNDK · 1h pair

Pair is strongly diverging away from the mean. High risk of further deviation. Regime: STRONG_DIVERGENCE (low confidence) Correlation: 0.69 · Cointegrated: yes Z-score: -1.73 entry / -3.82 rolling Half-life 22.3h · Hurst 0.87 · Hedge ratio 1.30 Pair volatility: 44.01% Backtest: 71.43% win · Sharpe 3.15 · 1.62% return · 1.65% max drawdown The recent divergence between DRAMUSDT and SNDKUSDT on the 1-hour timeframe appears to be driven by a combination of transient market dynamics and structural factors that have pushed the spread significantly away from its historical mean. Despite the strong divergence classification, the regime confidence remains low, indicating that while the spread is stretched, the environment is somewhat uncertain and volatile, which heightens risk but also sets the stage for a potential mean reversion. From a narrative standpoint, there is no clear, strong catalyst in the latest market news or sector-specific developments directly explaining the sharp relative moves in DRAM and SNDK. Neither asset has reported significant fundamental changes or macroeconomic events recently that would justify a sustained decoupling. This absence of a clear fundamental driver suggests that the current spread deviation is more likely a temporary dislocation rather than a structural shift. In such cases, mean reversion strategies tend to be effective as prices gravitate back toward their long-term equilibrium. Quantitatively, the pair’s cointegration and relatively high correlation imply a stable long-term relationship, reinforcing the expectation that the spread should revert. The half-life of about 22 hours indicates a moderately quick mean reversion speed, meaning the spread historically tends to correct within roughly a day or so, which aligns well with the 1-hour timeframe signal. The rolling Z-score at -3.82 is significantly beyond the typical entry threshold, signaling an extreme divergence that historically has been profitable to trade, as evidenced by the backtest’s 71.4% win rate and a Sharpe ratio above 3, reflecting strong risk-adjusted returns. The high Hurst exponent near 0.875 suggests persistent trending behavior in the spread, which can sometimes delay reversion, but the regime classification as STRONG_DIVERGENCE with low confidence implies that while the spread is currently stretched, the momentum behind this divergence is not robust enough to sustain further deviation indefinitely. This creates a favorable setup for a pullback. Looking at the individual assets, DRAM’s recent relative weakness could be attributed to short-term profit-taking or sector rotation away from memory chip stocks, while SNDK’s outperformance may stem from renewed investor interest or positive sentiment in its niche market segment. However, neither move is supported by strong fundamental shifts, making the divergence appear more technical than fundamental. In summary, the lack of compelling fundamental news to justify the current spread level, combined with the strong statistical evidence of cointegration, a significant but historically mean-reverting Z-score, and a half-life conducive to timely correction, all point toward a probable mean reversion. The backtest results further support this view, showing that similar divergences have yielded positive returns with controlled drawdowns. While the low regime confidence advises caution, the overall setup suggests that the spread is more likely to revert than to continue diverging, making the current position a statistically and contextually justified bet on mean reversion.