Pair is strongly reverting towards the mean with accelerating velocity and stable volatility.
Regime: STRONG_REVERSION (high confidence)
Correlation: 0.76 · Cointegrated: yes
Z-score: 1.49 entry / 1.79 rolling
Half-life 2.4h · Hurst 0.90 · Hedge ratio 0.79
Pair volatility: 28.07%
Backtest: 59.26% win · Sharpe -0.93 · -0.84% return · 3.02% max drawdown
### Pair Analysis: SAND / LINEA
* **Roll Z-Score (1h):** 1.79 (LINEA is rich relative to SAND)
* **Roll Z-Score (4h):** 3.07 (Strongly positive; indicates significant divergence)
* **Correlation:** 0.76 (1h)
* **Half-Life:** 57h (1h) / 23h (4h)
* **Hedge Ratio (4h):** 0.764 (Sizing: 43.3% SAND / 56.7% LINEA)
### Trade Context
* **Directional Alignment:** The user's stated direction (Long SAND / Short LINEA) is **quant-optimal** based on the positive z-score (selling the rich asset, buying the cheap one).
* **Sentiment:** Both assets face bearish headwinds. SAND suffers from a cooling metaverse narrative and persistent sell-pressure; LINEA faces supply-side risks from upcoming token unlocks and holder concentration.
* **Technical Note:** The 4h z-score of 3.07 suggests an extreme divergence. While this supports the mean-reversion trade, the high z-score also reflects significant volatility in the spread. Ensure stop-losses are set to account for potential further divergence before mean reversion occurs.
SAND
LINEA