ADA-DOT L1 Pairs Spread Mean Reversion

A market-neutral (net-zero directional exposure) pairs trading strategy on two correlated Layer-1 altcoin futures: ADAUSDT and DOTUSDT on Binance. The strategy maintains dollar-neutral positions — simultaneously long one and short the other — profiting from the mean reversion of their price ratio rather than directional moves. Both are mid-cap L1 smart contract platforms with high correlation (typically 0.80-0.90 over 30-day windows) driven by shared macro/crypto-beta exposure. When their ratio diverges beyond a z-score threshold, the strategy bets on convergence. Uses 4-hour bars for signal generation, keeping trade frequency moderate (estimated 2-4 trades per week) with average holding periods of 1-5 days. Only OHLCV data required — no supplementary data dependencies, minimizing verification complexity. The strategy is inherently hedged against broad market moves (BTC crashes, rallies) since both legs move together on crypto-beta, isolating the idiosyncratic spread as the tradeable signal.