Pair trading

Pair trading is a market neutral strategy. Which strategy may implement in market which any conditions. Bull market ,bear market and sideways market traders who can trade at any time.
One stock should be long position and another one is short position, both positions are create hedging naturally. But both stocks should be in same industry and moving one direction, as well as both stock is being highly correlated.
 What is the benefits of pair trading?
Traders who can trade reduce the risk
They are not worry about the market direction
Who can avoid the major risk
                Stock selection
As I early mentioned, Both stocks should be highly correlated.
When select the long position that stock its standard deviation, if it is being better -2.
At that same time, short position standard deviation better if may +2.
Select the fundamentally strong stocks for long position
Select the weak stock and weak sector when take the short position.
Large institutions, hedge funds are mostly using this strategy. in  Many developed country mutual funds is released market neutral strategy funds.