BANKNIFTY - HDFC Pair Analysis

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End-of-day divergence (Standardized residual) is -0.201.
Half life of pair is 7.47.
Real time (live) divergence is calculating using following formula:
[hdfc_price - (0.0693 * banknifty_price) - 0.594]/40.1

(where 0.594 is mean error and 40.1 is standard error)
Technical strength of BANKNIFTY is 8.1. (Support & Resistance)
Technical strength of HDFC is 7.3. (Support & Resistance)
Recommendation
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Entry Criterion: Take positions when divergence becomes (+/-)2.5. And exit positions when divergence becomes (+/-)0.0.
Stop Loss: Put your stop loss when divergence becomes more than 3.0 or less than -3.0. We suggest you always use stop losses.
Note: When you trade in futures, keep in mind the expiry date of futures as divergence might not end before expiry date.
Click here to see all recommendations for pair banknifty-hdfc.
Analyse any other pair:

How to choose pairs?
Choose stocks from same sector/subsector.
Use stock with large market capitalization as first stock.
Here is a list of pairs chosen analytically.

Charts

BANKNIFTY Futures - NSE
Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
June 29, 2017 23135.95 3119440.0 50766.0 73645.0 23182.75
July 27, 2017 23151.4 53280.0 745.0 1024.0 23182.75
August 31, 2017 23179.1 2480.0 34.0 39.0 23182.75
Lot size: 40.0.

HDFC Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
June 29, 2017 1604.15 8140500.0 7863.0 9091.0 1598.85
July 27, 2017 1595.95 40500.0 79.0 79.0 1598.85
Lot size: 500.0.
Click here for backtesting results.

BANKNIFTY-HDFC Analysis with different time frames and thresholds

Time Frame 6months, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 73756.83695
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 68221.7427195
Time Frame 6months, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 61558.1176148
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 54383.3758044
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 48606.6895796