BANKNIFTY - HDFC Pair Analysis

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End-of-day divergence (Standardized residual) is 1.46.
Half life of pair is 13.4.
Real time (live) divergence is calculating using following formula:
[hdfc_price - (0.0702 * banknifty_price) - 0.184]/64.6

(where 0.184 is mean error and 64.6 is standard error)
Technical strength of BANKNIFTY is 4. (Support & Resistance)
Technical strength of HDFC is 7.7. (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
April 26, 2018 24990.3 443880.0 59780.0 88716.0 25010.9
May 31, 2018 25021.75 2077600.0 40638.0 62264.0 25010.9
June 28, 2018 25036.45 28600.0 381.0 544.0 25010.9
Lot size: 40.0.

HDFC Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
April 26, 2018 1850.05 3570500.0 6232.0 10990.0 1850.45
May 31, 2018 1862.65 18072000.0 9406.0 14386.0 1850.45
June 28, 2018 1871.55 66000.0 46.0 46.0 1850.45
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 72360.5435765
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 67336.268793
Time Frame 6months, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 65540.7194274
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2, Total Profit 51900.2694402
Time Frame 3months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 51068.1619127