In utilizing the short interest data, one can look for a large percentage increase in the number of shares sold short, or the short interest ratio, which tells the number of trading days that would be needed to cover the short position.

FORBES: Don't Short These Oil Stocks

"When you have a large open short position and not enough physical barrels to cover your short when the contracts expire, " says Paul MacAvoy, professor emeritus at the Yale School of Management.

FORBES: Inside The Semgroup Bust

The revenue from the short sale can help cover the cost of the long position, making the pairs trade inexpensive to put on.

FORBES: The Secret To Finding Profit In Pairs Trading