Pairs trading is a quantitative arbitrage strategy that exploits financial assets with mean-reversion characteristics. It involves identifying two stocks with closely correlated price movements; when their relative price trends diverge, the undervalued stock is bought and the overvalued one is sold short. Profits are realized by closing positions when the relative price relationship reverts to normal. This paper selects suitable stock pairs for pairs trading using the cointegration test, and establishes trading thresholds through the fixed-parameter method and the GARCH model to form a complete trading strategy. Finally, the strategy is empirically tested using real data from China’ s financial market to verify its effectiveness.

Wenli Li. An Empirical Study on Pairs Trading Strategy in China's A-Share Market—Taking the Liquor-Making Industry as an Example. International Journal of Social Sciences and Economic Management (2026), Vol. 7, Issue 1: 154-164. https://doi.doi.org/10.3807/IJSSEM.2026.070116.

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