I'm kind of trying to understand and model indian stock market, for now, a research paper about statistical arbitrage in the stock markets. The paper is available at SSRN.
Generally speaking, the stocks generally follow the sector move. Sometimes, there might be little price inefficiencies between the stocks in the same sector. Lets say its mean divergence, the stocks might diverge from a general mean divergence, but they are most likely to converge back if the volume while the divergence happened is small.
I'm just trying to read the paper and understand the concept and model it in scala lang for my personal understanding of indian market in search of some reasonable trading strategy instead of drawing random lines on the chart.