Seeking Advice: Has Pairs Trading Become an Overcrowded Red Ocean?

Thanks for sharing the chart. Even for ‘intuitively linked’ pairs like AUD/NZD, relationships can temporarily decouple due to macro/regime factors (rate differentials, China exposure, risk-on/off, commodity shocks, etc.), so this could simply be a decoupling phase right now. I’d treat the hour-level result as a signal, not a hard fact. Might be worth checking past decoupling episodes: when they started, what macro backdrop drove them, and how/when the pair re-coupled. That historical pattern could itself become a useful filter or feature.