BANKNIFTY - HDFC Pair Analysis

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End-of-day divergence (Standardized residual) is -1.81.
Half life of pair is 11.1.
Real time (live) divergence is calculating using following formula:
[hdfc_price - (0.0705 * banknifty_price) - 2.22]/50.3

(where 2.22 is mean error and 50.3 is standard error)
Technical strength of BANKNIFTY is 6.0. (Support & Resistance)
Technical strength of HDFC is 4.3. (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
January 25, 2017 18861.7 2337000.0 64721.0 98862.0 18820.8
February 23, 2017 18924.15 376680.0 6092.0 9089.0 18820.8
March 30, 2017 18972.45 53600.0 263.0 407.0 18820.8
Lot size: 40.0.

HDFC Futures - NSE

Expiry Date Close Price Open Interest Number of Trades No of Contracts Underlying Closing Price
January 25, 2017 1239.15 7521500.0 4421.0 8647.0 1237.3
February 23, 2017 1244.65 5303500.0 1174.0 5171.0 1237.3
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 58588.4980843
Time Frame 6months, Entry Threshold 1.5, Stop Loss Threshold 2.5, Total Profit 54248.3782074
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 3, Total Profit 51083.4218618
Time Frame 1year, Entry Threshold 2, Stop Loss Threshold 2.5, Total Profit 50557.0446418
Time Frame 6months, Entry Threshold 2.5, Stop Loss Threshold 3, Total Profit 47951.6979107